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THE STUDY 



OF 



POLITICAL ECONOMY. 



HINTS TO STUDENTS AND TEACHERS. 



BY 

J. LAURENCE LAUGHLIN, Ph.D., 

ASSISTANT PROFESSOR OF POLITICAL ECONOMY IN HARVARD UNIVERSITY. 






NEW YORK: 
D. APPLETON AND COMPANY, 

I, 3, AND 5 BOND STREET. 
1885. 



H37i 

■ L 3 



Copyright, 1885, 
By D. APPLETON AND COMPANY. 



FILIUS 
MATRI BENIGNiE. 



PREFACE. 



The existence of this little book is due to 
an attempt to convey, by lectures to students, 
an understanding of the position which political 
economy holds in regard, not merely to its 
actual usefulness for every citizen, but to its 
disciplinary power, and to the qualities of mind 
which are necessary for success in the study. 
It was hoped, thereby, that young men might 
more intelligently decide whether they should 
begin the study, and, even when they had purr 
sued it for a time, whether they should continue 
it. Each man by his own judgment, after an 
analysis such as is given within of the powers 
required for the study of political economy, 
should be enabled to come to a decision for 
himself more wisely than any one else could 
reach it for him. I desired in this way to aid 



6 PREFACE, 

in a judicious selection of courses by the stu- 
dent who had some freedom of choice in his 
CO lege course. 

The interest which the public now manifests 
in economic studies led me to put the material 
of my lectures into a general form, in order that 
they might assist inquirers in any part of the 
country. No special knowledge has, therefore, 
been demanded of the reader by way of prep- 
aration for the substance of what I have intro- 
duced into this volume. By avoiding, as far as 
possible, all technical language, I have sought 
to make the inquiry useful to any general read- 
er of intelligence who may be interested to 
know how to study political economy. But 
that which I have most at heart is the exten- 
sion of instruction in political economy in all 
schools and colleges, and the improvement in 
methods of teaching the subject I need hardly 
say that I shall be glad if these pages call out 
any suggestions by which these two objects 
may be furthered. 

J. Laurence Laughlin. 

Harvard University, 
Cambridge, Mass., May, 1885. 



CONTENTS. 



CHAPTER I. 

PAGB 

Our Civil War the Cause of a New Interest in Eco- 
nomics 13 



CHAPTER II. 
The Character of Political Economy as a Study . 51 

CHAPTER III. 
The Disciplinary Power of Political Economy . . 73 

CHAPTER IV. 

The Relations of Political Economy to the Law, 
the Ministry, and Journalism 90 

CHAPTER V. 
Methods of Teaching Political Economy , , .115 



A TEACHER'S LIBRARY, 

SELECTED FROM 

ENGLISH, FRENCH, AND GERMAN AUTHORS. 



General Treatises. 

John Stuart Mill's "Principles of Political Economy." 
Abridged, with critical, bibliographical, and explanatory notes, 
and a sketch of the History of Political Economy, by J. Lau- 
rence Laughlin. A text-book for colleges (1884). 

Professor Fawcett's " Manual of Political Economy " (Lon- 
don, sixth edition, 1883) is a brief statement of Mill's book, 
with additional matter on the precious metals, slavery, trades- 
unions, co-operation, local taxation, etc. 

Antoine-Ehse Cherbuliez's "Precis de la science econo- 
mique" (Paris, 1862, 2 vols.) follows the same arrangement 
as Mill, and is considered the best treatise on economic science 
in the French language. He is methodical, profound, and 
clear, and separates pure from applied political economy. 

Other excellent books in French are : Courcelle-Seneuil's 
"Traite theorique et pratique d'economie politique" (1858), 
(Paris, second edition, 1867, 2 vols.), and a compendium by 
Henri Baudrillart, " Manuel d'economie politique " (third edi- 
tion, 1872). 

Roscher's "Principles of Political Economy" is a good 
example of the German historical method : its notes are 
crowded with facts ; but the English translation (New York, 
1878) is badly done. There is an excellent translation of it 
into French by Wolowski. 

A desirable elementary work, " The Economics of Indus- 



lo ^ TEACHER'S LIBRARY, 

try" (London, 1879; second edition, 1881), was prepared by 
Mr. and Mrs. Marshall. 

Professor Jevons wrote a " Primer of Political Economy " 
(1878), which is a simple, bird's-eye view of the subject in a 
very narrow compass. 

Important General Works. 

Adam Smith's " Wealth of Nations " (1776). The edition 
of McCulloch is perhaps more serviceable than that of J. E. 
T. Rogers. 

Ricardo's "Principles of Political Economy and Taxa- 
tion" (1817). 

J. S. Mill's "Principles of Political Economy" (2 vols., 
1848— sixth edition, 1865). 

Schonberg's " Handbuch der politischen Oekonomie " 
(1882). This is a large co-operative treatise by twenty-one 
writers from the historical school. 

Cairnes's " Leading Principles of Political Economy " 
(1874); "Logical Method" (1875), lectures first delivered in 
Dublin in 1857. 

Carey's " Social Science " (1877). This has been abridged 
in one volume by Kate McKean. 

F. A. Walker's "Political Economy" (1883). This au- 
thor differs from other economists, particularly on wages and 
questions of distribution. 

Treatises on Special Subjects. 

W. T. Thornton's "On Labor" (1869). 

H. George's "Progress and Poverty" (1879). In connec- 
tion with this, read F. A. Walker's " Land and Rent " (1884). 

J. Caird's "Landed Interest" (fourth edition, 1880), treat- 
ing of English land and the food-supply. 

McLeod's "Theory and Practice of Banking" (second 
edition, 187 5-1 876). 



A TEACHER'S LIBRARY. 



II 



Goschen's " Theory of Foreign Exchanges " (eighth edi- 
tion, 1875). 

W. G. Sumner's " History of American Currency " (1874). 
John Jay Knox's " United States Notes " (1884). 
Jevons's " Money and the Mechanism of Exchange " 

(1875). 

Tooke and Newmarch's " History of Prices " (i 837-1 856), 
in six volumes. 

M. Block's " Traite th^orique et pratique de statistique " 
(1878). 

Leroy-Beaulieu's " Trait6 de la science des finances " 
(1883). This is an extended work, in two volumes, on taxa- 
tion and finance ; " Essai sur la repartition des richesses " 
(second edition, 1883). 

F. A. Walker's " The Wages Question " (1876) ; " Money " 
(1878). 

L. Reybaud's " Etudes sur les r^formateurs contemporains, 
ou socialistes modemes" (seventh edition, 1864). 

Rae's " Contemporary Socialism " (1884) gives a compen- 
dious statement of the tenets of modern socialists. See, also, 
R. T. Ely's "French and German Socialism" (1883). 

Dictionaries. 

McCulloch's " Commercial Dictionary " (new and enlarged 
edition, 1882). 

Lalor's " Cyclopaedia of Political Science" (i 881-1884) is 
devoted to articles on political science, political economy, and 
American history. 

Coquelin and Guillaumin's " Dictionnaire de I'^conomie 
politique" (1851-1853, third edition, 1864), in two large 
volumes. 

Reports and Statistics. 

The "Compendiums of the Census" for 1840, 1850, i860, 
and 1870, are desirable. The volumes of the tenth census 



12 A TEACHER* S LIBRARY. 

(1880) are of great value for all questions ; as is also F. A. 
Walker's "Statistical Atlas" (1874); and Scribner's "Statis- 
tical Atlas of the United States," based on the census of 1880. 

The United States Bureau of Statistics issues quarterly 
statements ; and annually a report on " Commerce and Navi- 
gation," and another on the "Internal Commerce of the 
United States." 

The " Statistical Abstract " is an annual publication, by the 
same department, compact and useful. It dates only from 1 878- 

The Director of the Mint issues an annual report deaUng 
with the precious metals and the circulation. Its tables are 
important. 

The Comptroller of the Currency (especially during the 
administration of J. J. Knox) has given important annual re- 
ports upon the banking systems of the United States. 

The reports of the Secretary of the Treasury deal with 
the general finances of the United States. These, with the 
two last mentioned, are bound together in the volume of 
" Finance Reports," but often shorn of their tables. 

There are valuable special reports to Congress of com- 
missioners on the tariff, shipping, and other subjects, pub- 
lished by the Government. 

The report on the " International Monetary Conference of 
1878 " contains a vast quantity of material on monetary ques- 
tions. 

The British parliamentary documents contain several an- 
nual " Statistical Abstracts " of the greatest value, of which the 
one relating to other European states is peculiarly convenient 
and useful. These can always be purchased at given prices. 

A. R. Spofford's " American Almanac " is an annual of 
great usefulness. 

J. H. Hickcox, Washington, publishes a very useful 
monthly catalogue of the Government publications, entitled 
" United States Publications." 



CHAPTER I. 

OUR CIVIL WAR THE CAUSE OF A NEW INTER- 
EST IN ECONOMICS. 

In some parts of our country there is a cur^ 
rent maxim among the old-fashioned gardeners, 
to the effect that " a wind-shaken tree will bear 
the more fruit." By widening its application, 
we shall find in it no little subtle force. In fact, 
it is a homely expression of an idea which un- 
doubtedly finds its parallel in individual and so- 
cial life. As individuals, we all know that there 
is no real growth of character except by a con- 
quest over opposing difficulties ; to do right 
when it is against our inclinations and preju- 
dices strengthens the moral fiber, so that the 
firm organism gives forth fairer and sweeter 
fruit. But carry the analogy one step farther 
— from the individual to society. In the social 
organism it is possible that we may find, as it 
were, a moral law of conservation of energy, by 



14 THE STUDY OF POLITICAL ECONOMY. 

which there appears a relation between a loss 
and a gain ; so that a sacrifice becomes the par- 
ent of a subsequent good. Some great convul- 
sions in political life find their justification when 
viewed in the light of this truth, and by it his- 
tory often reveals to us some different lessons 
than those which lie on the surface of events ; 
but it is the most natural thing that this inter- 
pretation should escape the minds of the partici- 
pants in the sacrifice, because the future gain 
may lie at such a distance and be so impalpable 
as even to elude considerable foresight. We 
are, however, already reaching that interesting 
distance from the events of the civil war where 
we can begin to study them historically, and to 
consider some of their evident effects. A few 
years ago, we saw armies go out of our sight 
during the civil war, only to come back thinned, 
injured by disease, with half their number left 
dead on the field. Death meant bitter, inde- 
scribable sorrow in all our homes. The experi- 
ences of the war were felt to be pitiless, inex- 
plicable, and hard. And yet, perhaps, a subtle 
suggestion may have passed into some of our 
minds that it was not simply by dying, or in 



THE STUDY OF POLITICAL ECONOMY. 15 

living, that the best law of our being was en- 
forced ; that there was, in truth, some Power be- 
hind it all ; that some purpose was being worked 
out through each one of us ; and that, although 
not comprehended by us all, each one was as 
necessary to the whole in the same way, for 
example, that each leaf is necessary to the com- 
pleted organism of the whole tree, and ceases to 
be when it is separated from the stem. But j-et 
it may be possible, without presuming too much, 
to begin to look for some of the results of that 
social and political upheaval which we must 
now admit has been the greatest and most con- 
siderable disturbance in our national life since 
the foundation of the government. It is worth 
while to examine whether the wind-shaken tree 
has borne the more fruit. 

The process by which citizens from secluded 
districts and remote towns were sent through 
new cities to opposite parts of the Union, ex- 
changing ideas with men of different habits of 
thought, was a marked feature of the war period, 
and leavened the mental life of the American 
people in a way hitherto little suspected. It 
was something like sending a country boy to 



1 6 THE STUDY OF POLITICAL ECONOMY. 

college, where he changes the ideas of the farm 
for what is best in literature and science ; but, in 
the case of the war, it was a college of national 
politics and struggles, and, instead of one boy, 
there were a million men. The rural popula- 
tion came into a knowledge of our cities, while 
the urban classes were carried away into new 
climates, and into unvisited parts of our vast 
domain. New sights, new methods of cultiva- 
tion, different standards of living, stimulated the 
dull and fired the active and enterprising men 
in the ranks. The life of the farm and the vil- 
lage was widened to an interest in the nation. 
About the same time, moreover, the vast in- 
crease in easy means of communication by rail- 
ways, and a great extension of the use of the news- 
paper and telegraph, which were stimulated by 
the war exigencies, brought provincial towns into 
direct connection with the outside world. In 
the process of comparison with the more attract- 
ive habits of the dwellers in the great cities and 
towns, even oddities of customs and dress began 
to disappear. In various ways like this, the 
thinking horizon was extended. The presence 
of complicated problems dawned upon the con- 



THE STUDY OF POLITICAL ECONOMY. jy 

sciousness of dull intellects, and brighter minds 
found new spurs to ambition in the questions of 
larger interest. On all sides men felt them- 
selves coming into contact daily with new diffi- 
culties, under a dim comprehension of their big- 
ness, but with a strong belief that their knowl- 
edge of how to deal with them was inadequate. 
In short, the tremendous crisis through which 
we passed during our civil war, apart from its 
effect on the preservation of the Union, has had 
a wide, although subtle, influence on the moral 
and intellectual character of the American 
people. 

It can easily be imagined that the work- 
ing of these new forces should have had a se- 
rious effect on a quick and susceptible race. 
Under somewhat similar conditions, they have, 
in fact, had a distinct influence on a more phleg- 
matic people than our own. Old students at 
Gottingen, on returning to the university since 
the late wars in which Germany has been en- 
gaged, are amazed to find the old-fashioned spot 
— where the customs, habits, and naive simpHci- 
ty of one hundred years ago had prevailed until 
quite recently — now wholly changed. The com- 



1 8 THE STUDY OF POLITICAL ECONOMY, 

mercial spirit has seized the formerly simple- 
minded peasants, and the quiet town now hears 
in its streets the heavy march of cosmopolitan- 
ism. 

The United States, as well as Germany, had 
new problems to solve. The conflict of arms 
ended the long slavery struggle, it is true, but 
the war brought with it intricate questions of a 
character very different from those which had 
gone before. Without warning, and conse- 
quently without the opportunity to make due 
preparation or acquire proper training, our pub- 
lic men were confronted, as the war progressed, 
with matters of vital importance not only in inter- 
national and constitutional law, but in taxation, 
and in every form of administration and finance. 
The demand for men who had devoted themselves 
earnestly to the study of governmental science 
was an imperative one ; but, generally speaking, 
it was met in a way which showed that there 
existed in the community a class from whom 
these necessary men could be recruited. That 
class was the legal profession of the country. 
The questions of reconstruction, the relation of 
the Federal Government to the States, the civil 



THE STUDY OF POLITICAL ECONOMY. 19 

rights of the negro, our attitude toward foreign 
powers during the blockade of the Southern 
ports, were not abandoned to men who had 
never habituated themselves to discussions such 
as were involved in their settlement. There 
were differences of opinion, of course ; but, in- 
asmuch as these differences of opinion were the 
outcome of different political theories, this itself 
proved that attention had been previously given 
to such subjects to the extent that crystallized 
systems of thought, formulated in dogmas, had 
been created by the various parties. It may 
then be truly said that, in respect of political 
questions, we were not wholly unprepared for 
the emergencies of the war. 

But, as has been suggested, other considera- 
tions than those of a legal and constitutional 
character arose, and new burdens were laid 
upon the public men of that day. The mag- 
nitude of the military operations involved an 
expenditure of money by the State on so large 
a scale as to demand from our statesmen a 
financial skill of an almost unparalleled kind. 
To meet these newly-presented questions of tax- 
ation finance, and currency, upon what body of 



20 THE STUDY OF POLITICAL ECONOMY. 

men could we call? To this, answer must be 
frankly made that the war overtook us without 
a supply of, or even a few, trained economists 
and financiers in public life. The economic part 
in the equipment of a public official had been 
hitherto almost wholly neglected. In fact, po- 
litical economy and finance had never been seri- 
ously studied in the schools ; but, if studied at 
all, they had been classed in the old-fashioned 
required curriculum with Butler's " Analogy " 
and the " Evidences of Christianity." They had 
been, moreover, compressed into the briefest 
possible time, which would naturally assure, if 
not a dislike of the study, at least a superficiality 
even worse than total ignorance. Although 
Adam Smith wrote his " Wealth of Nations " in 
1776, it is a mortifying fact that political econo- 
my was practically an unknown science to the 
American people before i860. 

When this fact is considered, and when we 
realize how unfit we were to handle economic 
problems skillfully, it is an interesting study to 
look into the way in which our people took 
up the burdens and tasks of our great civil con- 
flict. There was the quick adaptability of 



THE STUDY OF POLITICAL ECONOMY. 21 

Americans to start with ; there was plenty of 
patriotism and good-will, and no lack of those 
high qualities of self-sacrifice and heroism which 
are still fragrant to us; but lawyers, such as 
Chase and Fessenden, were -practically our only 
financiers. Operations which required patience, 
experience, knowledge, and leadership had to 
be carried on by men who had no such quali- 
ties. Early in the war they were required to 
consider a scheme of raising loans, and to adjust 
a plan of taxation corresponding to the extraor- 
dinary war expenses ; but the banks became 
loaded with unsalable United States bonds, 
and, unguided, the country drifted at once into 
a position where specie payments were sus- 
pended at the end of 1861. Without consider- 
ing alternatives, they created a national debt in 
a few years as great as that incurred by old des- 
potisms of Europe in centuries ; without fore- 
sight, or financial leadership, they fell into a 
ruinous issue of irredeemable paper money, 
which even yet, although somewhat contracted, 
still remains a source of anxiety and danger; 
without intending it as the aim of a definite 
policy, but simply through a desire to gain a 



22 THE STUDY OF POLITICAL ECONOMY, 

war revenue, they imposed heavy customs duties 
on imports, which have brought into existence 
business interests largely dependent on the con- 
tinuance of these temporary war - measures. 
When it is realized that principles of taxation 
are probably less understood to-day, even by 
intelligent men, than any other branch of eco- 
nomics, it is not surprising to find that in 1864 
Congress was occupied only five days in pass- 
ing through both its branches the most gigantic 
taxation measure of the war. The National 
Bank Act, moreover, which has fortunately 
given us the best system of banking ever en- 
joyed by the country, was in reality recom- 
mended to Congress with the hope that it would 
facilitate the sale of United States bonds and aid 
our tottering credit. We blundered egregious- 
ly; but our vast resources made it possible to 
blunder without much suffering. Then, since 
all our national questions come before the vot- 
ers, the country was obliged to listen to discus- 
sions in Congress, in the newspapers, and on the 
"stump," to very difficult problems of foreign 
trade, currency, and finance. Out of our very 
blunders, and from this revelation to the people 



THE STUDY OF POLITICAL ECONOMY. 23 

of its ignorance, its inability to know how to 
meet the demands of a great emergency period, 
rose a desire, slowly growing throughout the 
community, as the recognition of the want was 
felt, to learn something of economics, and to 
study the principles which underlie the material 
prosperity of the nation. Out of the conscious- 
ness of weakness developed in the struggle came 
a natural longing for strength. The political 
leader who spoke, the journalist who discussed, 
the citizen who listened and read, all began to 
lament their want of training, and to admit the 
need of wholesome and sound instruction. The 
wish to speak intelligently on every subject 
which is uppermost in men's minds is a work- 
ing factor in the nature of all Americans ; and 
the constant reference to economic questions in 
the journal which lay on the breakfast-table was 
at once a constant reminder to the reader of his 
ignorance and a laudable stimulus toward bet- 
ter knowledge of such subjects. The parent 
became anxious that the son should have the 
training which he had never got ; and the new 
generation is now responding to this feeling. 
In fact,*it is now unquestionable that a new 



24 THE STUDY OF POLITICAL ECONOMY, 

interest in economics and finance has already 
arisen, and the cause of it seems to be very clear. 
The Civil War was, so to speak, the convulsion 
which brought into existence a desire for the 
study of political economy in the United States. 
The country was stirred to its depths by eco- 
nomic questions ; for they entered into the po- 
litical issues of exciting campaigns. The war 
issues thus did for the United States — in a dif- 
ferent way, of course — even more than the corn- 
law agitation did for England. They actually 
gave birth to new motives for study. There 
never has been a time in our history when there 
was so evident a desire to get light on the eco- 
nomic problems of the day as now. There is a 
new stir among the ranks of the young men at 
college ; and the printing-press sends forth an 
increasing flood of new books upon subjects 
which are constantly discussed in the daily 
newspapers. There is, without doubt, a new- 
born but slowly growing attention by the 
younger men of our land to the necessity — as 
well as the duty — of fitting themselves properly 
for the responsibilities of citizenship. In every 
social class, and in every department of busi- 



THE STUDY OF POLITICAL ECONOMY, 25 

ness, men are eagerly asking for information on 
economic topics. If the war has given us this 
— the absence of which used to be so often la- 
mented by thoughtful men a few years ago — 
then may some of our sacrifices not have been 
in vain. In that case the wind-shaking has 
surely resulted in abundant fruit. 

To the minds of some persons the tangible 
evidences of this movement may not have 
been shown ; but it will not be difficult to 
give visible proof to such people. In the pres- 
ent awakening in educational discussion, one 
phase of which has been called the " Greek 
Question," it is worth while to notice the influ- 
ence of the war period on the college curricu- 
lum. In most of our schools and colleges, on 
the breaking out of the war — and even to the 
present day — the pecuniary resources and en- 
dowments had been tied down by the provis- 
ions of donors, under the binding force of old 
traditions, to supply instruction in the custom- 
ary Greek, Latin, mathematics, and philosophy, 
which were then considered the only essentials 
of a liberal education. But when, after tasting 
of the forbidden fruit of civil strife, our naked 



26 THE STUDY OF POLITICAL ECONOMY, 

ignorance was revealed to us, and when we 
looked about to see wherewithal our ignorance 
should be clothed, and in what schools the new 
studies could best be followed, it was discov- 
ered that the college curriculum (with a few ex- 
ceptions) made practically no provision for such 
instruction. In the old days, when only sailing- 
vessels entered Boston harbor, but one chan- 
nel was practicable, and all the fortifications 
were placed in such a way as to command this 
single means of approach ; yet, when steam took 
the place of sails, another channel proved the 
best, but it is now wholly undefended. The 
old ship-channel must be defended, but so must 
the new one. Likewise, in the case of collegiate 
studies, the old subjects are desirable, of course, 
but they are not the only desirable ones. The 
new demands, due to the progress of the age, 
must also be met. We shall, therefore, look 
with interest to see if the college curriculum 
shows any evidence of changes made to satisfy 
the new wants. As we look into the work of 
various institutions, these changes will be found 
to be very considerable. In fact, the response 
of the schools to the new demands is at once 



THE STUDY OF POLITICAL ECONOMY. 27 

the evidence and the result of the quickening 
and stimulating conditions already described. 
A comparison of the amount of instruction in 
pohtical economy given by the principal insti- 
tutions of the land in i860 and 1870 with that 
given in 1884 will furnish us new proof that the 
wind-shaken tree is yielding good fruit. (See 
pages 28 and 29.) 

When it is considered that the resources of 
institutions have been generally hampered by 
restrictions as to their use, this change in the 
course of studies could have taken place only 
by virtue of a very urgent pressure arising from 
the public for such instruction. Nor can any- 
thing show more distinctly than the foregoing 
tables how young is any real systematic study of 
political economy in this country. It was not 
likely that there could be any number of 
trained economists among us in the days when 
no serious attention was given to economic 
study at the chief seats of learning. If it is 
thought strange that we have had no " Ameri- 
can school " of economists (except the followers 
of Carey), there is a good reason for it in the 
absence of any attempt to stimulate the best of 



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o- 
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30 THE STUD Y OF POLITICAL ECONOMY. 

our youth to devote themselves to this branch 
of learning. But no excuse for a lack of train- 
ing can now be made, and there is hope that 
the present generation will give evidence of 
having made good use of its better opportuni- 
ties. 

But apart from questions of training, there 
is a peculiar interest in the present position 
of political economy. It is one of the high- 
est attractions of a branch of study that 
the student can enter it as one of a body of 
scholars who are still acting as discoverers and 
investigators. All of the results of political 
economy are not yet finally settled ; and al- 
though its outlines are fairly laid, within which 
any progress must be carried out, it offers the 
peculiar charm to an ambitious mind that some- 
thing may yet be done toward shaping its edifice 
into fairer proportions. Particularly does the 
new field in this wide country, of varying re- 
sources, offer tempting opportunities for special 
studies on our own economic conditions, and in 
the application of principles to the mass of in- 
dustrial facts around us. 

The whole trend of civilization, moreover, is 



THE STUDY OF POLITICAL ECONOMY, 31 

in the direction where such studies will be more 
and more useful. In past centuries govern- 
ments, in an unsettled state of society, found 
their chief concern lie in an attention to ques- 
tions affecting life and property. Now that 
Christianity and the progress of enlightened 
ideas of government have made life and liberty 
more secure, in these later years legislation has 
concerned itself rather with property than life. 
A few centuries have made a great change in 
this respect. In the Middle Ages, while robber 
barons gained an income by an investment in 
castles, retainers, and arms, trade was regarded 
as plebeian : to fight, or to oppress, was consid- 
ered as more noble than to encourage produc- 
tion, or work for the improvement of the poor. 
In the changed industrial conditions of to-day, 
castles have become factories ; retainers, produc- 
tive laborers ; and arms, the hammers and tools 
of the artisan ; while the affairs of peaceful trade 
and the increase of wealth are the chief causes 
of solicitude in the modern State. In the 
Southern States, for example, we have disposed 
forever of a question of human liberty in regard 
to the slaves — a bit of mediaevalism — and in that 



32 



THE STUDY OF POLITICAL ECONOMY. 



part of our land we have turned our faces to- 
ward economic problems. How can the South 
best use its rich land, its timber, and its fine 
mineral resources ? These are the new ques- 
tions. By the alembic of war, and by the inev- 
itable increase of population and wealth, our 
public measures have, in truth, become almost 
entirely economic. 

To one who has not reflected on this matter, 
it is almost surprising to be told that national 
measures are now of a kind that require for 
their intelligent treatment some other training 
than that of a lawyer, to say nothing of the ir- 
relevancy of service in the army. But mere 
lawyers and soldiers will no longer do for legis- 
lators. Consider the character of the questions 
at this time pressing upon Congress for consid- 
eration, and which are fraught with serious re- 
sults to the business interests of the whole coun- 
try. If we omit the administrative and politi- 
cal legislation on the Civil Service, the succes- 
sion to the Presidency, and a National Bank- 
ruptcy Law, the remaining questions before 
Congress to-day are almost entirely economic. 

I. There is, in the first place, the false sil- 



THE STUDY OF POLITICAL ECONOMY, 33 

ver dollar, masquerading in sheep's clothing, 
waiting to catch the unwary business world 
napping, when it will gradually assume its true 
depreciated character and devour from 15 to 18 
per cent of all creditors' dues as estimated at 
present prices. The common laborers, more- 
over, receiving at first the same money wages 
as now, will find, when prices have risen to the 
depreciated silver standard, that they must bring 
about a new adjustment, entailing strikes, mis- 
understandings, and loss, until their wages shall 
rise to a sum sufficient to buy again as much as 
they do now. Laborers can not believe that 
their wages are so high as to be willing to suffer 
this losing game to go on. What has Congress 
done with this urgent question ? Just what it 
did in the last months of 1861, and the early 
part of 1862, when it left the country to drift, 
unaided and undirected, upon the shoals of de- 
preciated paper money. Monometallists and 
bimetallists, business men and bankers, have 
been all alike assaulting the dangerous silver 
legislation, but yet Congress has remained a 
very Gibraltar, in which the silver owners, 
supported by those who favor a cheap unit 



34 THE STUDY OF POLITICAL ECONOMY. 

with which to pay their debts, are securely in- 
trenched. 

2. Next, there is the banking question. The 
United States is a great commercial country, and 
its business interests will grow with its popula- 
tion and wealth ; and these interests are inex- 
tricably wound up with banking and the ability 
to obtain loans. Nothing can be more delicate 
and sensitive than the machinery of banking 
and credit in any community ; and yet men, to 
satisfy the prejudices of their constituents, han- 
dle this mechanism with about the same air of 
cheerful indifference as that which character- 
izes a child when dragging around a rag doll by 
the heels. Persons of limited horizon live too 
entirely in the present ; they do not see that the 
present has grown out of the past. In the old 
days of vicious and changing systems of bank- 
ing, different in different States, no one knew 
what bank-note was good, and our faith was 
pinned on the statements in a ** Bank-Note De- 
tector," issued frequently enough to meet the 
changing values of the State-Bank issues. We 
know little to-day of the losses suffered by note- 
holders in those former times ; for the present 



THE STUDY OF POLITICAL ECONOMY. 35 

National Bank system absolutely secures the 
note-holder against any loss, and because a note 
issued in Vermont is equally good in Oregon 
or Texas, these notes give a stability to trade in 
every part of the Union. And yet the whole 
problem of banking in the United States is un- 
solved. It is at present based upon a deposit of 
United States bonds, which are fast being paid 
off by our surplus revenues. What basis shall 
we adopt as a security for notes when the na- 
tional debt is quite extinguished ? This is a 
matter which vitally concerns every citizen 
who has any business stake in our land. 

3. Again, Congress has been struggling 
with the most difficult of all problems — national 
taxation ; the most difficult, because, even if the 
best policy were perfectly seen, there is an end- 
less conflict of interests, placing us in great 
danger of passing under a rule of the strongest 
interests, not under the rule of impartial justice. 
We must resolutely face the fact that a re- 
examination of our whole scheme of taxation 
can not be any longer deferred. The heavy 
taxation burdens imposed during a time of war 
and peril, to the fullest extent that the country 



36 THE STUDY OF POLITICAL ECONOMY, 

could stand, were demanded by the presence of 
large armies in the field which were destroying 
wealth without creating it. The whole situa- 
tion has changed. There have been twenty 
years of peace. The national debt has been 
reduced one half ; and, instead of being obliged 
in 1867 to raise taxes to pay annually $143,000,000 
of interest on the public debt, we are obliged 
in 1883 to collect only $59,000,000. The change 
to a peace footing means a readjustment of all 
branches of taxation ; one can not be diminished 
by itself, any more than we should consent to 
remove the winter clothing from the right 
side of the body when summer comes and 
leave the left side still in winter array. The 
question, therefore, involves a decision upon the 
retention of internal taxes on distilled spirits and 
tobacco ; of import duties on materials of manu- 
facture and the articles of the laborer's con- 
sumption ; of the management of our surplus 
revenue ; and the whole sub-treasury system. 
It is a serious task, as imperatively demanded as 
it is difficult of execution. It calls for a knowl- 
edge of taxation methods in other countries than 
our own ; and offers a tempting field for ener- 



THE STUDY OF POLITICAL ECONOMY, 37 

getic and manly endeavor. In the coming years 
the tariff will be one of the chief political issues, 
and as never before will it be discussed purely 
on economic grounds. Hitherto the question 
has been, Shall heavy customs-duties be levied 
for revenue with which to continue the war, or 
pay off the war-debt ? Now the question is, since 
the originating cause has disappeared, Shall the 
tariff be retained because, purely in itself, it is 
economically best for the whole interests of 
the country? 

4. But, perhaps, no matter excites more sen- 
timental interest than the story of the rise of 
our merchant shipping until about the year 
1856, and of the subsequent steady and per- 
sistent decline of our tonnage to the present 
day. Out of conditions originating a century 
ago enactments have found their way into our 
statutes which are as much out of place as snow 
storms in June. A junto of selfish interests 
unite to protect these barbarisms. Ship-build- 
ers are engaged in an industry the products of 
which (ships) are absolutely forbidden importa- 
tion into the United States, not even if duties 
are paid on them as on the products of other 



38 THE STUDY OF POLITICAL ECONOMY, 

industries. Such a prohibition exists for no 
other article. Moreover, owners of vessels, curi- 
ously enough, are exposed to open competition 
in our own ports on equal terms with the citi- 
zens of other countries in all parts of the 
world ; but the foreigner is permitted to come 
into our ports with a carrying instrument, 
bought in whatever country he may buy it 
most cheaply, while the American owner must 
buy his ships here, where the cost per ton is 
very much greater than abroad. In this way, 
with an instrument costing an American more 
money than it does the foreigner, the foreigner 
is nevertheless now permitted to compete with 
him without restrictions. No wonder ship-mas- 
ters can not carry as cheaply as foreigners, even 
if they exact no lower rate of profit ; no wonder 
the percentage of exports and imports carried 
in American vessels has dwindled— apart from 
the influences of other bad laws— from 82.9 per 
cent, in 1840 to 15.5 per cent, in 1882. The 
problem of our shipping needs the touchstone 
of some wider training than is furnished by self 
ish individual interests. Our self-complacency 
may be soothed, perhaps, by the reflection that 



THE STUDY OF POLITICAL ECONOMY, 35 

the preservation of injurious laws on the statute- 
books is a marked characteristic of conserva- 
tism, even in a republic. 

5. Discussions on the nature and value of 
paper money have formed an important part 
of political campaigns in the past, and it had 
been hoped that the paper-money demon had 
been laid. The inflation and contraction of our 
circulating medium were the shibboleths of 
hostile camps, who almost monopolized public 
attention for some years. It was once thought 
that our legal-tender notes were a temporary re- 
source, made possible at the most only in time 
of war and distress ; but we can no longer feel 
that this position is a refuge. The Supreme 
Court, by the decision of Judge Gray, has most 
unfortunately decided that Congress has the 
power to issue legal-tender notes in times of 
peace and when under no stress of a war neces- 
sity ; a situation all the worse, because Congress 
is made the sole judge of the necessity for the 
issue. As matters now stand, all the trouble- 
some and intricate discussions on the question 
of paper money, which we once thought had 
been settled forever, are still possibilities of 



40 THE STUDY OF POLITICAL ECONOMY, 

the future, and, if Congress should so choose, 
it might repeat at this day all the errors which 
have made the words " continental currency " a 
by-word for absence of value. It would be 
discouraging to think that the same battle 
must be fought over again, were it not that 
we recognize the lack of simple and elementary 
instruction on these subjects in the only schools 
where the mass of our voters are educated. 
At present, the newspaper and the political 
speaker are the only means of instruction on 
these subjects which reach the majority of the 
American people. The common schools give 
no teaching on such essential matters. And on 
the question of the best circulating medium for 
the United States there will be wanted, in the 
future, the best learning and the best ability 
of this and the coming generations. The pres- 
ent state of affairs can only be a temporary 
one; we do not have one thing or the other, 
a policy for or against our present Government 
issues. We simply acquiesce, because they give 
us no trouble for the time being. 

6. A farmer with a large orchard scarcely 
notices the loss of a few apples; but when 



THE STUDY OF POLITICAL ECONOMY. 41 

poachers actually extend their operations to 
taking away his trees, the sources of his wealth, 
he is likely to become more vigilant. In much 
the same way, it may be said that the United 
States is becoming interested in the policy of 
our public-land system. We are lately awaken- 
ing to the fact that we have had no consistent 
economic policy in regard to our public lands 
and the settlement of our vast Western domain ; 
and yet, as concerns the principles of land 
tenures and of the distribution of wealth, a lack 
of policy is of momentous interest to our coun- 
try. The public lands are rapidly drifting out 
of the hands of the general Government, and 
no one seems to have cared much what dis- 
position was made of them. Now that they 
are nearly gone, now that the dwindling is 
apparent, we are coming to interest ourselves 
in their fate ; but the possibilities of good are 
fast disappearing under the cloud of accom- 
plished facts, where nothing can be done. Will 
an educated public opinion make land-thieving 
too bold a process to warrant an attempt at it ? 
We laud the ownership of homes by workmen ; 
we hear much talk of the nationalization of land 



42 THE STUDY OF POLITICAL ECONOMY, 

in place of private property ; but there is little 
attention given to the question whether the 
** unearned increment " might not be retained in 
the case of land which has never as yet become 
private property. Would it not be to the in- 
terest of social safety to encourage the existence 
of a large body of yeomen resident on the land ? 
Here are matters needing grave and serious 
consideration. 

7. The questions of the day of an economic 
character are startlingly large in their impor- 
tance. The mere mention of the word ''rail- 
way " brings before the mind a congeries of 
difficult questions affecting western farmers, 
the abihty of the State to regulate freight and 
passenger charges, and in short the whole 
vexed discussion of State interference. Rail- 
ways afford probably the largest field of invest- 
ment in the country, and the settlement of a 
policy of supervision and regulation for them 
will affect the wealth and income of unnum- 
bered small shareholders in every part of the 
Union. No other branch of industry affects so 
large a number of our population, directly or 
indirectly. And yet a supine public allows 



THE STUDY OF POLITICAL ECONOMY. 



43 



Congress to rush bills of vital importance 
through the various steps to final enactment 
without debate or due consideration, and — so 
far as most people are concerned — in perfect 
ignorance of the motives which caused the 
legislation. 

8. It will, doubtless, be wearisome to more 
than mention the topics of Postal Telegraph, 
Chinese Labor, Strikes, Trades Unions, Commu- 
nism, Co-operation, and Commercial Crises, all 
of which demand present attention, because 
every day we are acting in regard to them on 
either a good or a bad conception, yet for 
whose treatment the nicest discrimination and 
knowledge are constantly demanded. 

9. But, so far, I have confined myself to 
speaking of public economic questions con- 
cerned only with our domestic relations. Leav- 
ing these behind, however, we shall find quite 
as important problems pressing for solution in 
regard to our intercourse with other countries. 
So long as we were the only civilized people of 
any moment on the Western Continent, the posi- 
tion we were to take toward our neighbors 
never gave us much need for reflection. Mean- 



44 THE STUDY OF POLITICAL ECONOMY. 

while, the growth of modern commerce, the ex- 
pansion of populous areas north and south of us, 
the discovery of great mineral wealth outside of 
our own limits, inviting our enterprise and capi- 
tal, has forced upon us the consideration of re- 
ciprocity with Canada, Mexico, and the West 
Indies. We have refused reciprocity to Canada, 
but we are considering the desirability of grant- 
ing closer commercial relations with Mexico, 
and are dallying with the Spanish West Indies. 
People are asking what is the reason for a re- 
ciprocity treaty ? What part does it form in any 
consistent scheme of intercourse with foreign 
nations? And here, again, economic informa- 
tion is demanded by the community. 

From this brief outline of the questions of 
the day, it is easily seen how imperative a de- 
mand exists for economic training, should any 
one aspire to become a member of our National 
Legislature, or even to cast an intelligent vote 
for such a member to represent us in it. These 
are matters which should necessarily be made 
subjects of instruction in our schools and col- 
leges. That a majority of public measures are 
economic is, from the foregoing review, a propo- 



THE STUDY OF POLITICAL ECONOMY. 45 

sition which no one can impeach. Consequent- 
ly, a heavy responsibility lies upon our institu- 
tions of learning to meet the new demands in 
a fitting manner, and upon the youth of the 
land to get adequate preparation for their civic 
duties. 

I could wish, however, that these were the 
only reasons why Americans should be obliged 
to secure economic training, or why our educa- 
tional forces should be strengthened on this 
side. But stronger reasons exist, in my opin- 
ion, than any that have been mentioned. These 
are to be found in what I may call the economic 
portents. To the present time we have been 
usually known as a "young country," which to 
the economist implies an abundance of cheap 
or unoccupied fertile land, a relatively scanty 
population, large returns to capital, and gener- 
ally high wages. A full knowledge of our re- 
sources has not practically been reached as yet. 
These splendid resources and the lusty health 
of our young country have made it possible, to 
the present time, for legislators to blunder with 
impunity. With great industrial productive- 
ness, due to an embarrassment of natural riches 



46 THE STUDY OF POLITICAL ECONOMY, 

and the industrial capabilities of our people, labor 
and capital, while constantly receiving larger re- 
turns, would not naturally be over-critical and 
hostile to each other. These things were a social 
protection from class antagonisms. But is it 
not possible that we are soon to reach a stage 
when the strength of this protection will be 
gradually reduced? Consider what is happen- 
ing yearly. The young-country theory of the 
past has led to the encouragement of unlimited 
immigration, because, it was said, our prairies 
should be settled and our towns should be built 
up. Streams of foreigners have been arriving 
on our shores, until it is not unlikely that we 
are already beginning to find the proportion of 
population to land a less favorable one than 
heretofore. These new-comers, moreover, do 
not in fact all go upon the land, but remain in 
the cities, like standing pools of dirty water in 
the streets, instead of being drawn off entirely 
to the country districts. Indeed, the importa- 
tion of uneducated, un-American, unrepublican 
workmen from foreign lands is a problem in 
itself, and calls loudly for some political and 
economic qualification before these aliens should 



THE STUDY OF POLITICAL ECONOMY. 47 

be admitted to the franchise. But, whether 
voters or not, these men reek with the doctrines 
with which they have been saturated in Euro- 
pean socialistic resorts. Such of them as come 
here stay in the cities : they have no dreams of 
work on the freshly-turned soil where Heaven 
gives a plentiful harvest to honest labor. Law- 
less communism — it is said advisedly — feeds on 
bad w^orkmen. A saving mechanic is never a 
communist. Whatever we have to fear from 
social ferments, wild antagonisms of class 
against class, riotous disturbances, secret drill- 
ing under arms, is to be charged against per- 
sons of the former description. 

But this is by no means the true ground of 
distrust in the future. Whenever the time 
comes — and come it must — when the " young- 
country " situation is well behind us ; when, by 
an increasing population and a closer settle- 
ment, our land is fully occupied ; when our spe- 
cial resources show some diminution in their 
richness ; when labor and capital both get small- 
er rewards^r-then, unless economically trained, 
even honest men, finding themselves cramped 
by barriers of their own creation, but brought 



48 THE STUDY OF POLITICAL ECONOMY. 

into operation by natural laws, will not know 
what is really happening, and in entire ignorance 
of the truth may fly in the face of law and wreak 
signal damage on society as the supposed cause 
of their evil situation. They may then be led 
into doing in the United States some of the 
things they are now doing in Europe. The day 
when this may happen with us is more or less 
distant, but it is coming nearer in proportion as 
the methods of men accustomed to social condi- 
tions in old and crowded countries are brought 
here by a never-ending stream of immigration. 
The necessary inference from this exposition 
must, it seems to me, be very clear to all. We 
must get ready to give economic instruction of 
a simple and elementary kind in every common 
school in the country, in such a way that it shall 
reach the ordinary voter, and influence the think- 
ing of the humblest workman. The State Legis- 
latures should move in the matter, and insert 
the study at first in the high schools, and later 
into the lower grades. The experiments of Will- 
iam Ellis in the Birbeck schools in England 
show that the suggestion is not at all visionary ; 
and it is the duty of intelligent men in the com- 



THE STUDY OF POLITICAL ECONOMY. 49 

munity to make this demand upon the schools. 
He who feels any stake in the experiment of 
free government on this continent would fail of 
his whole duty did he not urge this plan as the 
only proper means to enable each man fittingly 
to perform his duties as a citizen. 

We have seen that the war has plunged us 
into the consideration of gigantic questions of 
an economic character, and that the growth of 
our country in numbers and wealth is making a 
true understanding of such matters more neces- 
sary than ever to the prosperity of the nation ; 
and we have noticed that, as a result of the 
national wind-shaking, a rising tide of new in- 
terest in such studies is becoming unmistaka- 
bly evident everywhere. But the disheartening 
fact is no less true that these new and impera- 
tive demands are met only by meager and in- 
adequate means in the chief seats of learning, to 
say nothing of smaller schools and colleges. It 
is a surprising fact that in some of the most im- 
portant institutions (even including those whose 
courses were given in this chapter) there is no 
settled instructor in this branch of teaching. It 

is a fact of my experience that the best men of 
3 



CO THE STUDY OF POLITICAL ECONOMY. 

the university, who would naturally incline to 
it, can not now find a career in economic teach- 
ing, because so few positions exist in this coun- 
try as honorable rewards for the industry and 
learning of ambitious students. Men find a pro- 
fession in teaching Greek and Latin, but not in 
teaching political economy. Above all ought it 
to be possible to find groups of the ablest of our 
young men collected at the universities, en- 
gaged in advanced economic study, writing 
monographs and investigating home problems, 
quite as much as they should study the geology 
or mineralogy of our own land. We have not 
yet really shown what kind of stuff Americans 
are made of for economic work. Stimulate in- 
vestigation and conscientious study on Ameri- 
can problems, and then we shall probably hear 
less of the absence of any school of economists 
among us. 

Of the character of the study of political 
economy, the mental qualities brought into play, 
and the methods of approaching the subject, the 
reader will find an explanation in the following 
chapters. 



CHAPTER II. 

THE CHARACTER OF POLITICAL ECONOMY AS A 

STUDY. 

Walter Bagehot once said of certain liter- 
ary economists, who had no bent for practical 
affairs, that they were " like astronomers who 
had never seen the stars." In fact, no small 
number of people believe that this applies to all 
political economists ; that they do very well as 
students of books, but are unable to keep their 
heads in the midst of facts and actual business ; 
and that only the "hard-headed" merchant is 
competent to explain to the uninitiated the 
causes of what he sees. As in many general 
beliefs, there is something just and right in this ; 
and yet there is something too which is not in- 
cluded in it, which leads the holder of the belief 
to narrow and illiberal conclusions in regard to 
a very important study. A fair and candid con- 
sideration should be given to the qualities of 



52 THE STUDY OF POLITICAL ECONOMY. 

mind called into play by the study of political 
economy, and then we may more easily judge 
of the character of the work demanded of an 
economist, and of the way in which these de- 
mands have been met. 

It is axiomatic that not every person can 
succeed in political economy any more than in 
art or music. Some people, although admirably 
equipped in other directions, have begun the 
study of political economy with great zeal, only 
to realize finally that anything beyond a certain 
general knowledge and use of its principles is 
denied to them. Any hint, therefore, although 
imperfect as mine may be, of a knowledge of 
the mental qualities requisite for success in such 
a study, will at least set to thinking those who 
propose to begin it, and possibly lead those who 
do not intend to study it to consider whether 
they have formed a right judgment upon the 
work already accomplished by economists. 

The mental qualities brought into use by po- 
litical economy are of two seemingly opposite 
kinds; and, simply because of this distinct op- 
position between them, it seldom happens that 
many persons combine them both to great per- 



THE STUDY OF POLITICAL ECONOMY, 53 

fection, and consequently few persons have 
achieved great success in the study. To illus- 
trate best the mental operations required, let me 
first recount briefly the process followed in an 
economic investigation. Certain phenomena are 
observed, and their accuracy ascertained : an 
hypothetical explanation deduced from existing 
principles of political economy, or a statement 
of the cause operating to produce the observed 
phenomena, is made on the best possible ground 
known to the investigator ; a process of verifi- 
cation then follows, wherein the hypothetical 
principle is applied to other observed economic 
facts ; and, if it explains the given conditions in 
all known cases to which it is applied, the law 
is considered established — ^just as we proceed to 
discover a law in physics (although the econo- 
mic law is not capable of quantitative accuracy 
in statement like the physical law). First, there 
is observation, then deduction * from the basis 

* Deduction is the process of reasoning from a general to a 
particular, and is opposed to induction, as thus defined by Mr. 
Mill : " The process by which we conclude that what is true of 
certain individuals of a class is true of the whole class, or that 
what is true at certain times will be true in similar circumstances 
at all times," " System of Logic," book iii, chap, ii, § i. In the 



54 THE STUDY OF POLITICAL ECONOMY. 

of established laws, in order to explain the ob- 
served facts, and lastly inductive verification, 
with a severe and exacting standard. Or, to 
again use the words of Bagehot, we act as if a 
man were arrested under suspicion of murder : 
a murder was known to have been committed, 
and the doer of the crime has been suspected ; 
and then, if, on resort to legal and just proof, the 
suspicion is found correct, he is declared guilty. 
Likewise, when economic phenomena are ob- 
served, the law expressing the relation between 
cause and effect is suspected ; and if, on com- 

earliest stage of economic science induction was used, as in the 
physical sciences, whose history is thus described : '* A long 
period of laborious inductive research, during which the ground 
is prepared and the seed sown, terminating at length in the dis- 
covery — most frequently made at nearly the same time by several 
independent inquirers — of some one or two great physical truths ; 
and then a period of harvest, in which, by the application of de- 
ductive reasoning, the fruits of the great discovery in the form 
of numerous intermediate principles, connecting the higher prin- 
ciples with the facts of experience, are rapidly gathered in. . . . 
But it is not in the discovery of axiomata media only that the po- 
tency of the deductive process has been exemplified. ... Of 
this the most eminent example is the lav/ of gravitation itself, 
arrived at by Newton in the main by way of deduction, from the 
dynamical premises supplied by Galileo." The problem was " to 
find a force which, in conjunction and in conformity with the laws 
of motion, will produce the planetary movements, already general- 
ized by Kepler." Caimes, "Logical Method," pp. 84, 85. 



THE STUDY OF POLITICAL ECONOMY. 55 

parison with the facts, this law is wholly sub- 
stantiated — as it were, " found guilty " — it is 
considered established. 

By the deductive part of the process, the 
logical and reasoning powers are called forth in 
a marked degree. Hence economic study 
needs, and in its processes gives, the discipline 
of the severer logical and mathematical sub- 
jects. And some years of observation in the 
class-room warrant the statement that, as a 
rule, he who enjoys and masters mathematical 
and logical work will succeed with political 
economy, provided he has to some extent also 
the other necessary mental qualities. What 
these other qualities are may be seen by consid- 
ering that, in the verifying part of the process 
above described, an imperative need exists for 
an honest, practical appreciation of facts, such as 
is possessed by merchants and men of affairs, 
coupled with an economic intuition, 3, faculty 
which is more or less inborn. Whether this 
economic intuition is a matter of cultivation or 
not, I do not feel that my experience is extended 
enough to decide ; but I am inclined to the be- 
lief that it is. The capacity to collect and ar- 



56 THE STUDY OF POLITICAL ECONOMY, 

range facts is a book-keeper's function ; but the 
ability to see through the confusing mass of de- 
tails and trace the operation of a governing 
principle requires an intuitive regard for facts 
and their causes possessed in a large measure 
hitherto by only a few men. 

If this analysis be a true one, it will appear 
distinctly how it is that qualities almost diamet- 
rically opposed to each other are necessary for 
the equipment of an economist of the first rank. 
On the one hand, he must have the power of 
close, sustained, and logical reasoning ; on the 
other, he must have a most thoroughly practical 
spirit, without vagaries and nonsense. The for- 
mer he gains chiefly by his academic training ; 
the latter, by general maturity and an intuitive 
or practical knowledge of the world of business. 
In short, he must be at once a (so-called) " doc- 
trinaire " and a " practical man." To be with- 
out one set of these faculties is to seriously and 
fatally prevent any great usefulness. A purely 
"practical man," without the logical training, 
can no more achieve economic success than a 
railway - locomotive, no matter how great its 
steam-power, can continue to run and reach its 



THE STUDY OF POLITICAL ECONOMY. 57 

destination without rails. And yet, a bookish 
and literary economist, without the practical 
intuitions, can accomplish nothing more than a 
finely finished and most perfect engine in the 
hands of an ignoramus who does not know how 
to get up steam. 

We here find the explanation of a very 
common belief among the wide ranks of the 
busy and successful men of affairs in the United 
States — a class who have generally had little 
academic training — that economists are mere 
** doctrinaires," whose assumptions are all a 
priori^ all in the air, and above the level of 
every-day work ; who had better make a for- 
tune in pig-iron, or fancy dress-goods, before 
they set up to instruct the community. Merely 
making money, however, does not at the same 
time make one logical. It is as if we should de- 
mand that every scientific physicist or chemist 
should have first put his knowledge into prac- 
tice by inventing an automatic brake, or a pat- 
ent-medicine, before he is competent to impart 
the principles of his science to others. The 
contempt of the practical world for (so-called) 
*' doctrinaires " is as great a mistake as for the 



58 THE STUDY OF POLITICAL ECONOMY. 

speculative writers to set themselves above the 
men of affairs. As in most questions involving 
both mental and material considerations, the 
just position lies somewhere between these 
extreme views. If an economist is an ab- 
stract thinker, and nothing else — unable to 
verify his deductions — then he justly merits 
contempt ; but in that case he is not a prop- 
erly equipped man, as we have described him 
above. On the other hand, it is common 
to see merchants or manufacturers showing 
great energy in studying and writing upon eco- 
nomic subjects, who, so long as they confine 
themselves to the range of facts within the 
limits of their own horizon, make most valuable 
and effective contributions to the verification of 
principles ; but, when, without accuracy, logical 
power, or a grasp upon governing principles, 
they begin to lay down general propositions 
based on their limited knowledge of particular 
facts, they are very apt to be less effective and 
useful than they are dogmatic. They will find 
that their general principle, owing to its insuf- 
ficient basis, will conflict with truths already 
established, and whose correctness they must 



THE STUDY OF POLITICAL ECONOMY, 59 

necessarily deny in order to make room for 
their little theory. He only is truly an econo- 
mist who, eagerly studious of facts, not in one 
occupation or place only, but in as many as pos- 
sible, applies scientific processes to his investi- 
gation, and produces that which becomes the 
world's truth, the property of men of all times 
— not the petty sum of thought which compre- 
hends only a small fraction of the facts. In 
other words, when a wide-awake man goes to 
books, he really goes to get the experience of 
the best observers of all countries with which to 
correct himself against false and narrow infer- 
ences drawn from his own limited experience. 
In order to show how far this analysis is 
based on experience, I shall appeal to the his- 
tory of the work of the most successful econo- 
mists. Such an historical survey will, in my 
opinion, give results of an interesting and in- 
structive kind. Adam Smith, Ricardo, Mill, 
and Cairnes combined in a high degree the two 
almost opposite kinds of powers needed for 
their success ; and these men have made the 
most considerable contributions to our present 
knowledge of economic principles. 



6o THE STUDY OF POLITICAL ECONOMY. 

It would be hard to name an author who has 
wielded a greater influence by his writings than 
Adam Smith by his '' Wealth of Nations" (i;;^). 
His work was a great and admitted success, as 
tried by any tests, whether of popularity or 
permanent influence on men's minds. But on 
his tombstone will be found inscribed the name 
of an extensive ethical work, " The Theory of 
Moral Sentiments," as an equal claim to dis- 
tinction with the " Wealth of Nations." What 
is worth noting about this is that the great 
writer was a Professor of Moral Philosophy in 
Glasgow, and had planned an extensive course 
of lectures in which political economy formed 
but one part ; and we find that by training, by 
aptitude, by study, he was a skillful master of 
logic; he had the power to proceed from a 
given premise to its logical conclusion, and to 
see the principles which followed from the ac- 
ceptance of a given position ; he could hold to 
an abstraction, in the form of general truth, un- 
weighted by the concrete accidents of form in 
which it might be at any time working ; and it 
was his pre-eminent ability in securing a firm 
grasp upon principles, apart from their applica- 



THE STUDY OF POLITICAL ECONOMY. 6i 

tion, which gave him later a scientific and sys- 
tematic control over his subject, and enabled 
him to weld it into a compact and cohering 
whole. It was this power which made it pos- 
sible for him to lay the foundations of a science 
of political economy. It widened his views, 
and made it easy for him to see the connection 
of one part of truth with the whole. In short, 
he possessed in a remarkable degree a logical 
and philosophic faculty, the first of the two 
requisites for successful economic work. But, 
then, to an almost equal extent, he honestly 
reverenced industrial and commercial facts ; he 
studied them eagerly, and made his book an ex- 
tensive collection of data on many special sub- 
jects. Everywhere on his pages one meets with 
the analysis and study of particular industrial 
phenomena to which his principles were ap- 
plied ; and in them the keen, observing Scotch- 
man, with a subtle, economic instinct, saw the 
operation of laws where the ordinary man of 
affairs saw only a crowd of familiar and mo- 
notonous details of business. The practical na- 
ture of his work is so well known that it seems 
unnecessary to call further attention to this side 



62 THE STUDY OF POLITICAL ECONOMY, 

of his make-up. So well has this been under- 
stood, that the late Cliffe-Leslie claimed for 
Adam Smith that his method of working was 
solely inductive, that is, by a method of reason- 
ing directly from particular facts to the general 
truth. A more liberal view of all the powers 
and surroundings of the great economist will 
not allow us to agree to this. And, as we try 
to take in the whole man, rather than any part 
of him, we are brought to the broader conclu- 
sion that it was, without question, the union of 
a philosophic and logical faculty, which enabled 
him to deduce his principles from ascertained 
premises, with a true and correct instinct in the 
application of these laws to facts, which lay at 
the bottom of Adam Smith's world-wide success 
in his " Wealth of Nations." He had the power 
to see the law working in the concrete ; to dis- 
close the operating force ; to shake off the in- 
cidental circumstances of its concrete envelope, 
and, after verifying his conclusions, formulate 
them in simple terms for use by others in sub- 
sequent explanations. The great Scotchman 
was at once the prince of "doctrinaires," and 
the most practical man of his time. 



THE STUDY OF POLITICAL ECONOMY. (y^^ 

Curiously enough, while Adam Smith ap- 
proached political economy from the side of 
abstract and metaphysical studies, his '' homely 
sagacity " led him constantly to practical re- 
sults, Ricardo approached the study as a rich 
banker and a successful man of business, who 
had early retired with a competence ; but yet it 
was Ricardo who, above all others, went farthest 
in attempting to formulate the principles he had 
arrived at in a form which stated abstractly the 
general truths, independent of the changing con- 
ditions in which these principles worked. So 
that in him we have a man of economic intuitions 
of the most practical kind, but one who early 
showed a fondness for mathematics and logical 
studies. Knowing only too well the myriad 
shapes in which facts arise before us, he was 
urged forward by a desire to express truth in a 
form as succinct and universal as possible. 
This tendency of his mind, taken in connection 
with unusual terseness and no great literary 
skill in exposition, has deceived people, chiefly 
because of his dry and peculiar method of stat- 
ing himself, into thinking that his conclusions 
were all based on unsubstantial premises ; while, 



64 THE STUDY OF POLITICAL ECONOMY. 

as a matter of fact, he was a hard-headed man 
of affairs, living at a time when the Bank of 
England restriction act and the duties on corn 
led him to try to find out the fundamental 
principles which were governing the value of 
money and the price of corn. The results of 
these practical investigations were seen in the 
doctrines of the " Bullion Report," and the eco- 
nomic doctrines of " Rent " and " International 
Trade." * In this way the work of the Scotch 

* No one has been more attacked, and less understood, than 
Ricardo. That he made proper use of the scientific methods can be 
seen by a brief quotation. In the following words Mr. Cairnes has 
shown how he made use of hypothesis, which is analogous to experi- 
ment in the physical sciences : " The question under consideration 
was the fundamental principle of international trade, and Ricardo 
wished to show that it might be the interest of a country to import 
an article from another, even though it were in its power to produce 
the imported article itself at less cost than it was produced at in 
the country from which it came. This, at first view, paradoxical 
position, Ricardo thus by means of a simple hypothesis (which, 
while it divested the problem of all its accidental complications, 
brought into clear light the few essential conditions on which its 
solution depended) was enabled to establish ; it being evident 
that, under the supposed circumstances, the known motives of 
men in the pursuit of wealth could only lead to the very result 
asserted. * Two men,' he says, ' can both make shoes and hats, 
and one is superior to the other in both employments ; but in 
making hats he can only exceed his competitor by one fifth, or 20 
per cent., while in making shoes he can excel him by one third, or 
33 per cent. ; will it not be to the interest of both that the supe- 



THE STUDY OF POLITICAL ECONOMY. 65 

Professor of Logic, who had a great deal of 
practical insight, was supplemented by the 
study of a successful man of affairs who had a 
strong passion for concise and abstract state- 
ment of economic principles. We can not 
properly say of the man who was introduced to 
the details of the money market at fourteen, 
was in business on his own account at twenty- 
one, and was a wealthy man at twenty-five, that 
he was a doctrinaire wholly given over to ab- 
stract speculations. 

John Stuart Mill illustrates what we have 
said in a different way. To him the fascination 
of abstract reasoning was so great, and the bent 
of his mind so strongly metaphysical, that this 
part of the economist's equipment preponderated 
in his make-up ; while his attention to the facts 
of practical life was not extensive. And this ex- 
poses whatever of weakness there is in his book. 
Perhaps no other systematic writer ever gained 
such success by perspicuous treatment, and a 
certain geometrical symmetry in the connection 

rior man should employ himself exclusively in making shoes, and 
the inferior man in making hats?'" "Logical Method," pp. 
93, 94. 



^e THE STUDY OF POLITICAL ECONOMY. 

of parts with a whole, as did Mr. Mill in his 
" Principles of Political Economy," and this 
quality has greatly added to the value of his 
work. But, while the abstract character of 
many of his chapters excites admiration because 
of the power of sustained reasoning which they 
show, yet it must be confessed that they are 
too often ill-adapted to the common apprehen- 
sion. Had he possessed more knowledge and 
acquaintance with practical business life, been 
nearer to the monotony of details, his work 
might have been imbued with a smack of 
practicality which would have redeemed its 
abstractness, and made it vastly more useful. 
Moreover, he would, as in the discussion of the 
wages question, have adapted his principles 
more correctly to the truth, and gained posi- 
tions less likely to be assailed after others had 
noted their too great symmetry and too few 
limitations. His early training accounts for his 
book as it stands, and explains his faults. Too 
much stress should not, however, be laid on 
what was only a partial lack in Mill's practical 
experience. Account must be taken of the life 
Mill led as a servant in the East India Compa- 



THE STUDY OF POLITICAL ECONOMY, 67 

ny's office, which widened his horizon, gave his 
mind practical employment, and furnished him 
with a great field of experience in men and 
things. This, without doubt, exercised a strong 
and steadying influence on his thinking, which 
had some of the faults of English insularity, 
and, taken together with his robust philanthro- 
py, gave that practical direction to his work 
which, while it was inadequate, yet redeemed 
him from the charge of being unduly given over 
to abstractions. Had he had an interest in 
work-a-day things which equaled his fondness 
for metaphysics and abstract thinking, he would 
have succeeded even more than he did, and he 
made a great success. His treatment of inter- 
national values is a conspicuous example of his 
faculty for extended reasoning, but, had he put 
it more as a practical man of affairs and less 
in the form in which he originally worked it out, 
he could have made a much better exposition 
of the principles, and gained vastly in his hold 
upon the reader. Does it not become evident, 
then, that mere philosophic acumen is not suffi- 
cient in the model economist? But, on the 
other hand, is it not evident that the ability of 



68 THE STUDY OF POLITICAL ECONOMY. 

a mere man of affairs is not sufficient to grasp 
the workings of principles in the confusion of 
details ? These two sets of faculties must be, 
and always are, combined in him who accom- 
plishes the best economic work. 

The personality of Mill's great successor, 
Mr. Cairnes, is a very interesting one. He 
both knew and thought much. Members of 
Parliament would come to sit by his invalid's 
chair, in which he was confined by a painful dis- 
order, finally ending in an untimely death, and 
find him more learned than they in the details 
and facts of certain legislation ; yet with this 
accumulation of practical knowledge, for which 
he had a peculiar aptitude, no one since Ri- 
cardo has shown so vigorous a faculty for inves- 
tigation, and the power of keeping his head 
while in the pursuit of principles. He was not 
befogged by metaphysical niceties, but saw his 
way through the complexity of actual business 
life with as sure and certain an insight into the 
actuating causes, and with as clear and defi- 
nite a view of the principles in operation, as an 
expert accountant when adding a column of fig- 
ures. In his little volume, " The Logical Meth- 



THE STUDY OF POLITICAL ECONOMY. g^ 

od," in which he explains his ideas as to the 
processes to be followed in an economic inves- 
tigation, his logical and philosophic side is most 
admirably seen. Nowhere else does he seem 
more clearly to show how essentially he had the 
power to handle a purely abstract question, 
such as that of method. And yet, on the other 
hand, it is to be noticed in his " Leading Prin- 
ciples " that the whole criticism, by which he 
amends Mr. Mill's positions — his study of value, 
the wages question, and international trade — 
shows how much more appreciation he had of 
the real facts of trade than Mr. Mill. Under the 
light of his economic insight the cold columns 
of Australian statistics and American exports 
and imports glow with brilliant illustrations of 
general economic laws. With a firm grasp upon 
principles, and the ability to see their operation 
in practical affairs, he examined the facts of our 
foreign trade before 1873, and came to the con- 
clusion that we were rapidly accumulating the 
material for a great financial explosion — nay, 
he even actually prophesied the panic which 
came in that year. Scarcely any other econo- 
mist affords a better illustration of the success 



yo THE STUDY OF POLITICAL ECONOMY. 

arising from the possession of these two almost 
wholly unlike powers of mind which I have 
been trying to show are essential for the high- 
est achievement in political economy. Mr. 
Cairnes was an economic tight-rope walker ; he 
could go with a cool head through airy spaces 
where other men became dizzy or fell to the 
ground. And, at the same time, he had the 
Englishman's sturdy respect for facts, with 
more than the ordinary Englishman's willing- 
ness to acquaint himself with social systems dif- 
ferent from his own. 

These economists, whose powers I have at- 
tempted to analyze, have been the ones who 
have contributed most to our knowledge of 
the principles of political economy, as they 
are understood to-day. Above all other writers, 
these men have possessed a useful economic 
intuition, and a respect for facts, which have 
given peculiar strength to their clear, abstract 
generalization of results in the form of uni- 
versal principles. They have been able to rea- 
son from ascertained premises to conclusions 
with steadiness and accuracy; and yet they 
have been able to seek the facts for verification 



THE STUDY OF POLITICAL ECONOMY. 71 

and illustration. Wherever other students and 
writers have accomplished less, it will appear 
that weakness arose from their entire or par- 
tial lack of one or both of these two sets of 
faculties. 

If my analysis is correct, it will explain some 
other things also. French writers are unex- 
celled in the power of lucid statement ; but the 
generalizing and less practical French (although 
there are exceptions) are not so likely to be 
good economists as the more common-sense 
English, Therefore, although the French have 
stated results in the most admirable way, they 
have not originated so much as have the Eng- 
lish. It is, then, reasonable also to expect that 
the practical Americans, with the keen insight 
of their men of affairs, may also furnish the 
material for excellent economists, whenever 
they set themselves seriously to get the proper 
systematic training. For, together with the 
zest for commerce, the Americans probably 
possess considerable aptitude for logical pro- 
cesses, if they care to cultivate themselves. 

If my exposition is accepted, it will now 
be evident what sets of mental qualities are 



72 THE STUDY OF POLITICAL ECONOMY, 

most demanded by this study. It is desirable, 
then, not only that he who thinks of beginning 
political economy, but he who has already 
given it some attention, should question wheth- 
er he possesses the requisite ability for gaining 
success. This, however, should not deter the 
man of but average capacity from seeking an 
elementary and general knowledge of its prin- J 

ciples. His duty as a citizen demands that; 
but he may well consider whether the prelimi- 
nary work calls out in him any real interest, 
and if he thinks of a future and extended course 
of study, whether he can bring to it the quali- 
ties of mind above described. 



CHAPTER III. 

THE DISCIPLINARY POWER OF POLITICAL 
ECONOMY. 

It may now be worth while to explain briefly 
some of the evident ways by which the study 
of political economy disciplines the mind. To 
most persons economic knowledge is favorably 
recommended because of its extreme usefulness 
to every citizen who casts a ballot ; but it will 
be found, I think, that its value as a mental ex- 
ercise — apart from the desire to get useful in- 
formation — is one of the main considerations to 
be kept in mind by students. 

It may seem somewhat startling to say of so 
practical a subject that, in a pre-eminent degree, 
it calls for the exercise of imagination. " That 
is just what we have always said," the scoffers 
at political economy say at once ; " so does 

novel-writing call for imagination, and a novel- 

4 



74 THE STUDY OF POLITICAL ECONOMY. 

ist is about as well fitted for the economist's 
position as the usual abstract thinker who 
masquerades as a teacher of political econo- 
my." To this it is to be replied that imagina- 
tion is one of the chief requisites for mathe- 
matical study also ; that a novelist is not neces- 
sarily a good mathematician goes without 
saying. The simplest propositions of solid 
geometry require the exercise of imagination, 
as, for example, in the picturing of forms and 
solids with intersecting planes, while the most 
logical student of the severest mathematical 
processes is called on for the exercise of this 
species of imagination. Still, as Tyndall says, 
" There are Tories even in science who re- 
gard imagination as a faculty to be feared 
and avoided rather than employed. They 
had observed its action in weak vessels, and 
were unduly impressed by its disasters. But 
they might with equal justice point to ex- 
ploded boilers as an argument against the use 
of steam. Bounded and conditioned by co- 
operant reason, imagination becomes the 
mightiest instrument of the physical discov- 
erer. Newton's passage from a falling apple 



THE STUDY OF POLITICAL ECONOMY. 75 

to a falling moon was, at the outset, a leap of 
the imagination." ^ 

The use of the imagination is, in my opinion, 
still more necessary in political economy than 
in the natural sciences, or in mathematics. I 
have already alluded in another chapter to the 
place occupied in economic processes by hy- 
pothesis. The following case given by Mr. 
Cairnes f will furnish a good illustration : " If, 
for example, [the] purpose be to ascertain the 
relation subsisting between the quantity of 
money in circulation in any given area of ex- 
change transactions and its value, [one] might 
make some such supposition as this: i, in a 
given state of productive industry a certain 

* " Scientific Use of the Imagination," in " Fragments of 
Science," p. 130. Tyndall himself, in the same essay (p. 149), 
makes use of the same intellectual " cart-horse " in speaking of 
the extreme tenuity of interstellar matter : " Suppose a shell 
to surround the earth at a height above the surface which could 
place it beyond the grosser matter that hangs in the lower re- 
gions of the air — say at the height of the Matterhorn or Mont 
Blanc. Outside this shell we have the deep-blue firmament. Let 
the atmospheric space beyond the shell be swept clean, and let 
the sky-matter be properly gathered up. What is its probable 
amount ? I have sometimes thought that a lady's portmanteau 
would contain it all. I have thought that even a gentleman's 
portmanteau — possibly his snuff-box — might take it in." 

t " Logical Method," pp. 90-91. 



76 THE STUDY OF POLITICAL ECONOMY, 

number and amount of exchange transactions 
to be preferred ; 2, a certain amount of money 
in circulation ; 3, a certain degree of efficiency 
(in the sense explained by Mr. Mill) in the dis- 
charge of its functions by this money ; 4, lastly, 
a certain addition made to the money already in 
circulation. These conditions being supposed, 
and being also supposed to remain constant, the 
scene of the experiment would be prepared. It 
is true the action of the added money can not 
be made apparent to the senses of the econo- 
mist, or to those of his hearers or readers, but 
from his knowledge of the purposes for which 
money is used, and of the motives of human 
beings in the production and exchange of 
wealth, it will be in his power to trace the con- 
sequences which in the assumed circumstances 
would ensue. These he would find to be an ad- 
vance in the prices of commodities in propor- 
tion to the augmentation of the monetary circu- 
lation ; a result from which he would be justi- 
fied in formulating the doctrine that, other 
things being the same, the value of money is in- 
versely as its quantity." From this it can be 
seen how prominent a part the exercise of the 



THE STUDY OF POLITICAL ECONOMY, 77 

imaginations plays in an economic investigation. 
The physicist and the geologist make use of the 
same power, it is true, but it seems to be more 
important to the economist than to them. Very 
often, in order to show the action of a single prin- 
ciple operating by itself, we must separate all 
conflicting agencies from the situation— just as 
the physicist experiments in a vacuum exhausted 
of air, for the purpose of learning the full effect 
of a force, like gravity, when acting by itself. 
The economist, however, is not able to repro- 
duce a given situation to the eye or ear, as is 
the physicist. He can not pile before him the 
exports of the United States or England, or 
summon before him the laboring-class or the 
capitalists of a country ; he must, therefore, 
picture to himself the actual facts, just as the 
geometrician does the forms of a solid, and see 
how the operating principle works. This is 
very far from " theoretical dreaming." It is at 
once a most difficult process, and a most serious 
discipline in learning how to think on such sub- 
jects.* 

* Expressing himself from a different point of view, Cliffe Les- 
lie said ; " Want of imagination is one of the causes of the inabil- 



7 8 THE STUDY OF POLITICAL ECONOMY. 

Not only in the advanced methods of inves- 
tigation, however, but in the most elementary 
economic study Avill the imagination be called 
into requisition. In beginning political econo- 
my, the perception of a simple general princi- 
ple is often absurdly easy, but, for its assimila- 
tion into our own thinking, it is necessary that 
it should have become an interpreter of facts 
everywhere about us. To this end, it is essen- 
tial for us to apply the abstaction, or general prin- 
ciple, in every possible case, to some concrete 
phenomenon. To illustrate my meaning in a 
simple way, it is one thing to say that in order to 
have value a commodity must satisfy some de- 
sire, and be hard to get ; and quite another thing 
to be able to call up in the mind an image 
which will show the application of the principle. 
For example, to a shipwrecked sailor on a 
rocky island a bag of gold has no value, it can 
satisfy no desire, for it can not keep him alive. 
The student is absolutely forced to imagine to 

ity of many economists to emancipate themselves from old ab- 
stractions, generalizations, and formulas. Their minds do not en- 
able them to realize actual phenomena, and to test theories on all 
sides by a multitude of instances." "Political Economy in the 
United States," in "Fortnightly Review," October 1880. 



THE STUDY OF POLITICAL ECONOMY. 79 

himself concrete conditions whenever he is read- 
ing a statement of principles by an author ; if 
he does not turn the subject into a reality in 
this way it will slip away from him like any- 
thing else on which he exercises merely his mem- 
ory. If he is talking about rent, he must, by 
his imagination, keep before him a picture of a 
farm as it is in reality ; he must call up the con- 
crete in an image, and follow out the expla- 
nation of the writer, or lecturer, by seeing the 
changes which take place as the exposition 
proceeds. I can not too much emphasize the 
importance of this method to clear thinking 
and satisfactory progress in political economy. 
The student must be constantly at work with 
his imagination, making a series of illustrations 
of what he is reading. 

It is largely by such mental exercise as this 
that a student best succeeds in assimilating the 
body of principles which make up the science of 
political economy. It has been frequently said 
to me, " I can understand the statements of the 
writer easily, but I do not seem to be able to 
use the idea when called upon to explain things 
in a different connection." This is exactly the 



8o THE STUDY OF POLITICAL ECONOMY, 

difficulty, as it is also, by struggling with the 
difficulty, one of the best disciplinary gains of 
our study. If the student had conceived in 
his own mind an image of the principle working 
in some definite facts, he would not have com- 
plained in this way ; the less so if he had tried 
it on more than one set of facts, and had seen 
how the principle operated in more than one sup- 
posed case. To understand an abstract princi- 
ple, without the ability to see it in the concrete 
form, and test its truth, is of little gain to any 
one. This would in truth make a "doctri- 
naire." And we may now see somewhat more 
clearly the true value to be set on the claims of 
the much vaunted man who scorns everything 
but facts, historical facts. We ought now to be 
able to recognize that the only " practical man," 
in any conceivable sense known to economic sci- 
ence, is he who, while seeing general principles, 
can best interpret the facts around him. The 
position thus gained, consequently, gives us 
added means of seeing how economic study can 
be most intelligently carried on. To follow 
through a course of political economy with- 
out the attempt above described, to think out 



THE STUDY OF POLITICAL ECONOMY. 8i 

the principles by use of the imagination, and 
by constant application to familiar facts, would 
be like trying to climb a perpendicular wall of 
ice — the student will not catch hold. 

Moreover, this kind of mental exercise is 
continually calling upon one for the ability to 
see the pivotal part in any statement, whether 
of fact or principle. Not to see the essential 
bearing of an exposition is a species of mental 
blindness; but exercise will gradually give 
clearer vision. Nothing is more common in 
the replies of untrained students to questions 
than the happy-go-lucky kind of answers which 
bear upon the general subject, but are aside 
from the point. Persons may write or speak 
about the question, but do not answer it ; what 
they say may be quite true in itself, but it 
is irrelevant. The faculty of hitting a point, or 
relevancy, is one, in my opinion, like concentra- 
tion of mind (to which it is nearly allied), which 
is largely capable of cultivation and growth. 
And the discipline of rigorous study in political 
economy is one of the best means of acquiring 
it. In my experience, there have been, I con- 
ceive, some interesting illustrations of this idea. 



82 THE STUDY OF POLITICAL ECONOMY, 

Trained lawyers have, by heredity, transferred 
this faculty of directness of thought to their 
sons ; and it has been possible, sometimes, with- 
out further data, to pick out the sons of law- 
yers from reading their examination-books in 
political economy. These young men " hit the 
nail on the head," and make clean work of their 
answers, without any mental shuffling, or avoid- 
ance of the essential point. 

To make progress in such a study as po- 
litical economy, the student must necessarily 
gain exactitude and clearness, both in writ- 
ing and speaking. Nothing is more striking 
in the experience of an instructor, as he faces 
a new class, than the limited powers of expres- 
sion possessed even by young men who have 
had, in most cases, a very extended course of 
classical training. It is largely due, of course, 
to vague and loose thinking. He who has 
clear ideas can generally manage to convey 
his meaning in varying degrees of force, cor- 
rectness, and elegance. The necessity, how- 
ever, of making clear distinctions between 
things, which at first seem all alike, to see 
forces operating where none were seen before, 



THE STUDY OF POLITICAL ECONOMY. 83 

stimulates unused faculties, and then, as a natu- 
ral result, progress becomes distinctly visible. 
Men Avho at the beginning expressed them- 
selves in halting, inexact, and timid words, with 
a seeming passion for brevity, will, at the end 
of the course in which they have been con- 
stantly pushed to express themselves, talk easi- 
ly and freely on subjects which would at 
first have frightened them by an appearance 
of abstractness. In this respect, the train- 
ing must be much like that in the study of 
metaphysics. Under constant criticism loose- 
ness of words and definitions will disappear — 
as clearness of ideas comes in. In no other 
study is inexactitude or lack of precision in 
words or facts more likely to stir up criticism 
and ridicule than in political economy, because 
in no other study are we more concerned 
with things which affect all the world in every 
day of its existence, and in which absurd re- 
sults and stupid mistakes are more easily seen 
by everybody. The economist must be vigi- 
lant and correct; and the results of this re- 
quirement are such as tend to keep him as 
careful and exact as is possible. The effect of 



84 THE STUDY OF POLITICAL ECONOMY. 

training under such conditions can not fail to 
be admirable. 

Again, the logical powers are constantly ex- 
ercised and stimulated. Political economy will 
not, of course, make a man logical ; but a stu- 
dent will feel the need of logical training and 
accuracy at every step. It will often happen 
that the intuition of the student will lead him 
to give a correct reply to a question regarding 
two things which have an apparent connection ; 
but, if he should be called upon to give the logi- 
cal chain of connection in every step, he will 
find the study a very different thing than he 
supposed. He will be taught to think. If he 
has been rigorously kept up to this process 
he will gradually get a faculty of reasoning 
with some ease about economic questions, and 
new problems will be better handled because 
of his experience in treating old ones. Every 
student will be able to mark his own prog- 
ress, if he has honestly done this work as he 
went along, when he looks back over the course, 
and sees that earlier difficulties, which at the 
time seemed serious, have now little power to 
delay him. 



THE STUDY OF POLITICAL ECONOMY, 85 

As the logical part of the study naturally 
brings its discipline, so we may expect that its 
practical side will stimulate the student in such 
a way as will teach him greater regard for facts, 
and for the immediate interests of life. His eco- 
nomic intuition will grow, also, as he becomes 
familiar with the definitions and fundamental 
conceptions of the study. New practice will 
constantly develop new power, and new confi- 
dence. It goes without saying that this can not 
come at once, and that the man who is unwill- 
ing to exert himself can not get it. But, al- 
though severe logical processes are demanded, 
as in mathematics, yet the student will be at- 
tracted by the peculiarly human and practical 
element in the questions discussed, and he will 
be drawn on to exert himself by his interest in 
these matters. He will be wiUing to do more 
in a subject whose ends are intensely practical 
than in one removed from any application to 
his own personal conditions. 

One other marked result of the study of po- 
litical economy deserves at least passing men- 
tion. Persons who by nature are unfitted for 
other kinds of academic work, and yet by cus- 



86 THE STUDY OF POLITICAL ECONOMY, 

torn or authority have trodden the beaten edu- 
cational paths with a dull sense of discourage- 
ment and incapacity, have, in many cases, been 
awakened to a hitherto unknown interest in 
study by the practical and interesting nature of 
the subject. Economic questions confront them 
everywhere, and they meet with their discus- 
sion over the table, on the walk, and in the 
newspapers. It, consequently, stimulates even 
a sluggish disposition to find that he can know 
something valuable about such practical matters 
of every-day importance. Livy or Thucydides 
may pall on his incapacity, but his curiosity 
may be piqued by having the functions of 
money explained to him. The purchasing 
power of his yearly allowance is something 
which comes home even to him. As enlarging 
the field for willing mental activity, and giving 
new and interesting objects for intellectual ef- 
fort, political economy forms one of the most 
effective factors in the movement w^hich in 
these latter days is liberalizing our courses of 
study, and is freeing us slowly from the cramped 
tyranny of a traditional training, still demanded, 
forsooth, because it once seemed good to the 



THE STUDY OF POLITICAL ECONOMY, 87 

schoolmen. Willing, enthusiastic study, since 
it interests and fits the faculties, is a better 
thing for discipline than the serfdom of drudg- 
ery in a subject which excites no spontaneous 
response and stirs an unwilling effort. And 
this is true, also, without any thought of under- 
valuing other branches of study. We must all 
admit that some minds are better fitted for one 
thing than for another, and that we can not do 
all things equally well. There is, therefore, a 
place for different studies so long as human abil- 
ities remain of a varied kind, and room should 
not be denied to any branch of learning which, 
apart from its " usefulness," is effective for men- 
tal discipline. 

A warning, however, should be given at the 
outset which may save later disappointment to 
some persons. No one would think of becom- 
ing an accomplished chemist or geologist in one 
course pursued for one year ; but many persons 
conceive that they can easily know all of politi- 
cal economy that is necessary for a sound judg- 
ment on current questions in a less time than 
that. It is true that they can read over the 
statement of principles in a less time, but they 



88 THE STUDY OF POLITICAL ECONOMY. 

can not become economists so easily. To have 
been trained until these principles become as 
familiar as the alphabet requires time — time not 
merely for the intellectual efforts of applying 
the principles, but time for the mind to mature 
under the exertion and to digest its food slow- 
ly ; since only by growth and experience can 
there come any development of the economic 
intuition and a power to call readily upon any 
part of one's acquisitions for instant use at any 
moment. This warning is not to be understood 
as deterring any one from an attempt to master 
the elements of political economy. A person 
of ordinary parts can by industry obtain an 
amount of knowledge which will not only be 
valuable to him as a citizen, and save him from 
errors, but it will give him discipline in the pro- 
portion of his application and energy. An ele- 
mentary course will serve a distinct purpose as 
part of a liberal education for every citizen, but 
he will not become an economist '•'■ teres atque 
rotundus " at once. A brief course in chemis- 
try may not enable the student to contribute 
immediately to a new theory of heat, but it may 
give him a highly useful knowledge of the chem- 



THE STUDY OF POLITICAL ECONOMY. 89 

istry of every-day things. We must not, there- 
fore, expect more from a short study of po- 
litical economy than we do from the same exer- 
tion in other serious studies. 



tV 



CHAPTER IV. 

THE RELATIONS OF POLITICAL ECONOMY TO 
THE LAW, THE MINISTRY, AND JOURNALISM. 

Political economy holds a very close con- 
nection with The Law on different grounds. 

In the first place, the disciplinary power of 
the study is very much that which is gained 
in the study and pursuit of the law. As has 
been already explained, the student of econo- 
mies is chiefly concerned in getting a firmly- 
rooted understanding of principles, which he is 
then constantly engaged in applying to the 
phenomena around him. Or, struck by some 
new or interesting fact, he sets himself to find 
the causes of the effects he has observed. In 
thus applying general principles to explain 
special facts, the student of political economy 
is doing almost exactly that which the student 
of law does, when he applies legal principles 
to particular cases, or when he is considering 



THE STUDY OF POLITICAL ECONOMY. 91 

whether the interpretation of the law in a de- 
cision of the courts applies also to the special 
case he has in hand. The modern theory of 
legal teaching no longer recognizes the wisdom 
of simply filling the mind with statements of 
what the law now is, but aims to force the 
student, under oversight, to discover the prin- 
ciple running through multitudes of cases al- 
ready decided, or constantly to apply principles 
to given facts. If this be a correct statement 
of methods of teaching in the law, it will be 
seen at once that the student goes through very 
much the same mental operations as in the 
study of political economy. There is in fact 
a striking similarity between the position of 
the practicing lawyer and the economist ; the 
lawyer is faced with a statement of facts by his 
client, to which, after he has sifted their accu- 
racy, he tries to discover what legal principles 
apply ; or the court, after ascertaining the truth 
of the averments on either side, then considers 
the applicability of certain general principles of 
law to them. The economist in like manner is 
brought to notice, for example, some practical 
phenomena of banking, or prices ; then he tests 



92 THE STUDY OF POLITICAL ECONOMY. 

the accuracy of the facts ; and finally sets him- 
self to discover what economic principles 
explain the observed statistics. The mental 
attitude of the student is thus almost exactly 
the same in the two cases. There could, there- 
fore — looking at the matter entirely from the 
disciplinary point of view — scarcely be any 
kind of study which would better train a man 
for the mental processes of a lawyer's work 
than political economy. 

For another reason lawyers have a neces- 
sary interest in our study. Those who follow 
the law are, in this country, most likely to be 
chosen to make the law in legislative assem- 
blies. Upon them will hang heavy responsibili- 
ties, apart from questions of law and adminis- 
tration ; for they must represent the economic 
interests of the country as well. From their 
numbers, also, are generally recruited the active 
campaign speakers in our election contests ; and 
it is becoming in them to study with care that 
which they expect to declare to the people in 
rhetorical sentences from the platform. Po- 
litical science, which includes legal and consti- 
tutional history, international law, ethics, the 



THE STUDY OF POLITICAL ECONOMY, 03 

study of government, and political economy, is 
a field of large importance in a land of popular 
government, and the legislator ought to be 
conversant, more or less intimately, with all its 
branches — and especially with political econo- 
my. This reason for the study of economics 
by the legal profession is the material one of 
*' usefulness," in the same way that a knowledge 
of guns is necessary for an artillery officer. 

Legal principles, moreover, are often based 
on economic grounds, and their force is to be 
gauged by their economic importance. Laws 
of bargain and sale are of this class; so, too, 
such as concern bills of exchange, and mercan- 
tile operations. Parts of the law like these 
stand in marked contrast to what is purely 
legal and formal, as, for example, the affixing 
of a stamp to a deed or mortgage. For the 
interpretation and discussion of the former 
principles, it is difficult to see how clearness 
can be obtained without an adequate under- 
standing of the underlying principles of politi- 
cal economy. This is a different thing, be it 
noted, from the need of physics or chemistry 
by the lawyer, in cases which hinge on a 



94 



THE STUDY OF POLITICAL ECONOMY. 



knowledge of these subjects. A case, the facts 
of which require a more or less profound study 
of physics or chemistry to understand them, is 
settled by the application of legal principles, 
covering not this one case, but any case of a 
similar kind ; and it is the insight into these 
principles affecting cases in general, and not 
the facts of any one special case, of which I 
am speaking. 

The relation of political economy to The 
Ministry is of an entirely different nature. To 
the ministry are relegated, rightly or wrongly, 
in a great degree, questions of ethics. It is true 
that students of ethics exist outside of the min- 
istry, but theirs is the one profession which is 
expected to see that some kind of ethics is put 
into practice by the individual. 

At the outset, we must learn that practical 
ethics begins where political economy leaves off. 
It is not desirable here to discuss whether or 
not such a branch of science exists as sociology; 
but there is certainly a growing feeling in favor 
of confining economics strictly to questions of 
wealth, as a means of reaching as exact con- 



THE STUDY OF POLITICAL ECONOMY, 95 

elusions as possible by a limitation of the field 
of inquiry. This is the only legitimate sphere 
of our study. When the economist has made 
clear that given social regulations have certain 
material effects for good or for evil on the wel- 
fare of any class in the community, then it is in 
order for others to take up the matter where 
political economy left it, and set themselves to 
discover the practical means by which mind and 
character may be acted upon, so as to bring 
about the good and avoid the evil results which 
political economy has shown must follow from 
stated conditions. This practical ethical work 
does not fall within the proper province of the 
economist; but if — owing to the fact that eco- 
nomic studies are as yet in their infancy, and that 
branches of thought closely dependent on politi- 
cal economy are supposed only to be known by 
economists — popular opinion forces the econo- 
mist also to perform the function of a teacher 
of ethics, or of a social philosopher, it should 
be kept distinctly in mind that in this case 
he has stepped over the boundaries of his own 
science, and is for the time being within the 
limits of another — although ian allied — study. 



g6 THE STUDY OF POLITICAL ECONOMY. 

It is true, of course, that the same man 
might be fitted to be both an economist and 
an ethical teacher ; and this was the rdle adopt- 
ed by both Adam Smith and John Stuart Mill. 
But still the fact remains that the whole field 
of political economy is much more vast than is 
usually supposed. The field is, in fact, so great 
that it is absurd to suppose that one man can 
cover it all in a lifetime. In but one single 
branch, that of money, as Professor Jevons says, 
no economist has ever pretended to have read 
all the literature. In short, one might properly 
confine himself, after general training, to the 
sole study of currency and banking all his life. 
The reason why the teacher can not do it is 
plain : it is only within ten or fifteen years that 
political economy has been allowed a real foot- 
hold in our college curriculum ; and, if he is not 
even yet obliged to give tuition also in history 
and moral philosophy, the instructor is, at least, 
expected to give a complete knowledge of po- 
litical economy to a class in three or six months, 
and add the discussion of ethics, in its proper 
relation to economics, in, perhaps, another 
month or two ! As yet the necessity for eco- 



THE STUDY OF POLITICAL ECONOMY, gy 

nomic teaching has been so little recognized 
that few chairs exist for instruction in politi- 
cal economy alone ; while a proper subdivision 
of the work — such as exists in the university 
departments of Greek, Chemistry, or Natural 
History — would require several chairs, one for 
each particular part of the study. Division of 
labor has not yet been applied to economic 
teaching. But, at least, we can demand that the 
economist should not be required to fill the 
function of an ethical teacher also. He is inevit- 
ably led to it, but it is not in the ro/e of an econor 
mist that he should enter on the new field. 

It seems, therefore, necessary to make this 
distinction between the work of the economist 
and the ethical teacher, if for no other reason 
than that, to do one part of his work respecta- 
bly well, he should confine himself to that alone. 
In fact, many high-sounding programmes exist, 
ostensibly covering history, statistics, econom- 
ics, and social science, which must some day 
be remodeled more in accordance with actual 
achievements in these fields and the limits of 
human life of the few men who are granted to 
carry them on. 
5 



o8 THE STUDY OF POLITICAL ECONOMY. 

It may now, perhaps, be understood what 
was meant by saying that ethics begins where 
political economy leaves off. An illustration 
will, however, make this meaning more clear. 
It is an accepted doctrine of political economy 
that capital is created by saving; and it is 
shown still further that saving depends upon 
the " strength of the effective desire to save " in 
a community. When the process of saving is 
still further analyzed, it is found that saving 
means a willingness to abstain from a present 
use of wealth in consideration of some future, 
and generally distant, reward. For example, a 
slave has painfully saved a little money at a 
time, instead of using it for clothing or amuse- 
ments, in order to purchase his freedom, even 
though he does not accomplish it for many 
years. Political economy does not concern it- 
self with questions of political freedom, for 
which the slave has a longing. It shows that 
saving increases in proportion to the ability of 
a person — no matter for what underlying cause 
— to bring the future reward so strongly before 
the mind that it overcomes the pressing, eager, 
tumultuous demands of the present gratifica- 



THE STUDY OF POLITICAL ECONOMY. qq 

tions ; or, in other words, in proportion to the 
abiUty to grasp the unseen as compared with the 
seen, A famiUar illustration of this has been 
given from the experience of the Jesuits with 
the natives of Paraguay, over whom they ac- 
quired a complete ascendency, and easily man- 
aged to get from them labor of the most fa- 
tiguing kind ; but at evening, when hungry, the 
seen was stronger than the unseen, and they use- 
lessly killed their oxen for food, regardless of 
the coming morrow. In this way political econ- 
omy has explained the motives which induce 
men to save, and has shown why the induce- 
ment is wanting. And here the duty of the 
economist ceases. So that, in the case of the 
slave, political economy does not set itself to 
explain the force which love of freedom exer- 
cises over the human mind, but simply affirms 
that, if such a force exists, strong enough to 
overcome a present desire for gratification, it 
will result in an increase of capital. 

But the eager, philanthropic world at once 
asks, as it considers the condition of the worst 
of the laboring classes, among whom there is no 
saving, or thought of the future. How can we in- 



lOo THE STUDY OF POLITICAL ECONOMY, 

duce men to save ? For an answer we must not 
go to the economist, but to the student of ethics. 
He who has made a study of the mind and 
character, and knows best their operations, and 
the springs which lead to action, must set him- 
self to find a solution of the problem — whether 
it shall be in education, in Christian teaching, 
or in some form of co-operation and industrial 
partnership. How the ideals of the laboring 
classes may be raised is wholly an ethical and 
not an economic inquiry. There is nothing to 
prevent an economist from joining in the 
search ; but he is then wearing the uniform of 
another sovereign. Yet, of course, it is evident 
that the ethical student can not know where to 
direct his energies with effect unless he be in- 
formed and guided by the work of the econo- 
mist. 

There is, then, a very important connection 
existing between political economy and the 
study of practical ethics. And, consequently, 
to no class in the community does the demand 
for a knowledge of economic principles, and for 
a practical realization of the means by which 
the masses of men should be touched, appeal 



THE STUDY OF POLITICAL ECONOMY, iqi 

with more justice and force than to the edu- 
cated ministry of the country. Just so far as 
they propose to treat social questions in their 
work of Christian teaching, or in effective pas- 
toral work among the poor, must they learn 
what channels political economy has shown to 
be open to their leavening efforts. An illustra- 
tion of this position may be found in the general 
question of charities. Political economy has 
earnestly taught that reliance upon individual 
self-help is more conducive to production than a 
necessarily enervating dependence on outside 
help, whether it be on the State or on the local 
government. It has pointed out the slackening 
of restraints on population whenever the State 
aided in wages, or in alms-giving. Now, these 
principles, so briefly hinted at, have been grossly 
violated by those whose good intentions have 
proved greater than their wisdom, and who, 
under the name of charity, have established in- 
stitutions for destroying the character and self- 
help of the poor. While, on the other hand, 
by a movement in direct obedience to economic 
principles, the most signal triumph of modern 
philanthropy in charitable work has been lately 



I02 THE STUDY OF POLITICAL ECONOMY. 

accomplished by the system of the *' Associated 
Charities," the object of which has been to as- 
sist misfortune through regular visits from per- 
sons of discretion, who can supply the lack of 
prudence among the unfortunate, but who do 
not give money ; who find avenues for unused 
or dormant powers, teaching the poor what 
practical labor they ought to undertake; and 
who, by showing how individual effort may be 
exercised, remove the existing premiums on 
vagrancy, and cease to emasculate exertion by 
gifts rendered for no consideration. 

There exists between political economy and 
Christianity at once a friendly and a close con- 
nection; and one is not at variance with the 
other. It has been the fashion in the past to 
save thinking by applying to political economy 
the catch-word " dismal science," because of its 
teaching on the question of restraints upon the 
increase of population among those classes 
whose productive power did not increase cor- 
respondingly with their numbers. If political 
economy pointed out that an increase of num- 
bers led to misery and poverty in certain con- 
ditions, then surely it were practical Christian 



THE STUDY OF POLITICAL ECONOMY, 103 

teaching to explain this, and strive to prevent 
this misery and poverty. In fact, the investi- 
gator and first expounder of the law of popula- 
tion was a country clergyman in England, Mr. 
Malthus. In teaching the universal rules of 
Christian precepts, the minister who expects to 
be of most good to the poor about him must 
learn in what practical channels these precepts 
lead him, or he will be disheartened by dismal 
failure. But as a Christian teacher, in enforc- 
ing the value of the unseen over the seen he is 
laying the foundation for the best practical po- 
litical economy — in fact, the essence of civiliza- 
tion. Such teaching will increase capital and 
check undue increase of population. 

Thus, without going far, we are able to see 
the laws of Christian ethics working through 
the medium of practical economic forms. The 
relation of economic work to the life of the min- 
istry might be further illustrated, but perhaps 
enough has been said to outline my understand- 
ing of it. The student of ethics stands in the 
very gratifying position of supplementing po- 
litical economy by suggesting practical means 
for influencing human nature to better ends. 



I04 



THE STUDY OF POLITICAL ECONOMY, 



Political economy rests content with trying to 
explain the relations between the various phe- 
nomena of wealth ; while the ethical reformer 
works to change what is wrong. Political 
economy explains ; it does not judge or reform. 

Journalism, although a young profession, is 
a growing one, and its influence upon public 
opinion is still greater than that of the minis- 
try. The newspaper has created a new avo- 
cation, in which an editor is obliged to deal 
with all the questions which agitate the human 
mind. Ideally speaking, the journalist ought 
to have read well in every subject, especially 
in home and foreign politics, law, economics, 
science, ethics, and literature. In practice, a 
division of labor inevitably takes place. But, 
even then, some subjects are oftenest before 
the public for discussion, and this consequently 
increases the importance of one part of the 
training for a journalist over another. As has 
been already pointed out, the largest propor- 
tion of questions before Congress are in their 
nature economic ; and to these are to be added 
the questions of state and local taxation, and 



THE STUDY OF POLITICAL ECONOMY, 105 

kindred measures, certain to be discussed in 
every newspaper which is read. Just here is 
the seriousness of the situation. All of these 
complex economic questions are sure to be 
discussed — irrespective of the knowledge or 
preparation of the writer. In other words, 
each newspaper is expected by popular opin- 
ion to declare itself with proper force and dog- 
matism on every subject before the public. 
The result of this is, that there is certain to be 
some diffusion of ideas on economic questions, 
either good or bad, throughout the whole land. 
No matter what we think about it, there is sure 
to be some teaching of one kind or another. 
The important point is, can this teaching be 
made good ? When we consider the extraordi- 
nary power of the press in moulding public 
opinion, the responsibility resting on journalists 
to give the right economic teaching is almost 
deterrent in its seriousness. And since it is 
absolutely certain that there will be economic 
ideas of some kind in the minds of the public, 
it is evident that we can make these ideas good 
ones, only by working at the purveyors of such 
writing in the journals of the land. 



lo6 THE STUDY OF POLITICAL ECONOMY, 

The relation of political economy to journal- 
ism is thus seen to be a very different one 
from that to the ministry. The latter carry 
out by ethical methods changes suggested by 
the economist as possible; while the former 
are economic teachers. In short, careful pre- 
paration in political economy is as necessary 
for an influential writer for the press as it is 
for the instructor of political economy in the 
schools and colleges. The day, we hope, is 
fast passing when a teacher of economics can 
face a class, without previous training and 
study ; and it is quite as absurd to place a man 
in an editor's chair who is distinctly unqualified 
for his position in respect of an adequate power 
to discuss economic questions. 

It would seem desirable, after a general 
course which gives a coup d'ceil of the whole 
field, that the journalist should, if his time is 
somewhat limited, give himself to studying the 
present economic questions on which political 
issues are turning, or which are uppermost in 
men's minds. Such a course of reading must 
necessarily change with the movement of events, 
but a few hints as to useful books might not 



THE STUDY OF POLITICAL ECONOMY. 



107 



be out of place. The subjects which are now 
before us have been already mentioned (Chap- 
ter I), but, besides a general control of eco- 
nomic principles, a knowledge of the following 
subjects, at least, should be urged as absolutely 
necessary for a journalist's immediate equip- 
ment: 

1. The History of American Tariffs; 

2. The National Banking System ; 

3. The Theory and History of Bimetallism ; 

4. American Shipping ; and 

5. Taxation. 

The question might be naturally asked, 
How can this preparation be obtained? To 
those who have the means of acquiring a uni- 
versity education the answer is evident. An- 
other class, composed of those hard-working, 
self-educated men, who are often doing excel- 
lent work without the prestige of a college 
training, can now enter the university courses 
as special students, pursuing only particular 
studies, of their own choosing. But, for the 
large class of men who can not now leave their 



Io8 THE STUDY OF POLITICAL ECONOMY, 

stations, and yet would gladly improve their 
daily opportunities for study, something can 
be done to make their work easier through 
the means of bibliographies issued by libraries 
and specialists. These should be graded : some 
lists of books should be adapted to a class not 
accustomed to technical work ; and then a com- 
plete and minute bibliography for specialists 
should be added. The scholars and universi- 
ties owe a debt to the community which has 
supplied them with the endowments and re- 
sources for carrying on instruction, and by the 
publication of helpful bibliographies can well 
afford to render the great accumulations of 
books, and the skill which they have gained 
through special studies, useful to the less for- 
tunate. Such lists are the campaign maps of 
any subject, which, in these days of many 
books, is obscured merely by the multiplicity 
of publications. 

As a practical illustration of the feasible- 
ness of this plan, it is easy to show what can 
be done in the above-mentioned subjects which 
were considered necessary to a journalist's effi- 
ciency. 



THE STUDY OF POLITICAL ECONOMY, 109 

1. The History of Airterica7i Tariffs. 

A bibliography of a general character has 
been already made * under the following heads : 

a. General works. 

b. Earlier Periods. 

c. Noteworthy Documents. 

d. Pauper-Labor Argument. 

e. View of Early Manufactures. 
/. Later View of Manufactures. 
g. Present Tariff (1884). 

2. The National Banking System, 

Inasmuch as, to my knowledge, no bibliog- 
raphy exists on this topic, I shall make some 
suggestions as to books. 

*' Extracts from the Laws of the United 
States relating to Currency and Finance " (Se- 
ver, Cambridge) gives the National Bank Act 
in connection with other financial legislation in 
a brief form. 

*' The National Bank Act " is published sepa- 
rately by the Government (and also by the Ro- 
mans Publishing Co., 251 Broadway, New York). 

* In an abridgment of Mill's " Political Economy," by the 
author (D. Appleton & Co., 1884, second ed. 1885), pp. 631-633. 



no THE STUDY OF POLITICAL ECONOMY, 

" Reports of the Comptroller of the Curren- 
cy," are published annually in December, by the 
Government in separate form, and also in the 
Finance Reports with other documents. The 
Comptroller is the officer who supervises the na- 
tional banks, and makes his reports to the Sec- 
retary of the Treasury. They contain official 
information as to banking statistics, and all 
questions affecting the condition of the banks. 
They do not begin, of course, before 1864. 
Those under the tenure of John Jay Knox are 
especially good. 

" The Decisions of the United States 
Courts " on the Banking Laws can be found 
analyzed in the Comptroller's Reports (e. g., in 
that of 1884, p. 77). 

"Finance Report of 1861 " gives the first 
recommendations to Congress, by Secretary 
Chase, for the adoption of the system. See 
also his Report for 1862. 

"Comptroller's Report of 1875" contains a 
history and explanation of the national banking 
scheme. See also Report for 1876. 

Bowen's "American Political Economy," 
chap, xvi, discusses the value of the plan. 



THE STUDY OF POLITICAL ECONOMY, m 

" The Advantages of the National Bank 
System of the United States now in Force," 
in the " Banker's Magazine," March, 1868, by 
George Walker. Also published separately. 

Some general treatment in modest form 
may be found in M. L. Scudder's ^' National 
Banking: a Discussion of the Merits of the 
Present System" (1879); ^'^^ ^I- W. Richard- 
son's "National Banks" (New York, 1880). 

As to the machinery for the retirement of 
notes, see a discussion in the " Atlantic Month- 
ly," February, 1882, ** The Refunding Bill of 
1881." 

3. The Theory and History of Bimetallism, 
A bibliography * has already been compiled 
under the following heads: 

a. Standards of Value. 

b. Bimetallic Theory. 

c. Gresham's Law. 

d. Compensatory Effect of Two Standards. 

e. Effect of Law on the Relative Values of 
Gold and Silver. 

* In the abridgment of Mill's " Political Economy," already 
referred to, pp. 633-635. 



112 THE STUDY OF POLITICAL ECONOMY, 

/. Production, and Relative Values, of Gold 
and Silver. 

g. Demonetization of Silver by Germany. 
h. Latin Union. 
i. Flow of Silver to the East, 
y. Depreciation of Silver. 
k. Appreciation of Gold. 
/. Bimetallism in the United States. 

4. American Shipping. 

A bibliography * has likewise been prepared 
on the following topics : 

a. English Navigation Acts. 

b. Navigation Laws of the United States. 

c. Growth of American Shipping. 

d. Steam and Iron Ships. 

e. Decline of American Shipping. 
/. Burdens on Ship-owners. 

5. Taxation. 

A few suggestions as to sources of informa- 
tion will aid an energetic student to get a gen- 
eral view of the subject. 

E. De Parieu's ** Traite des imp6ts consi- 

* Abridgment of Mill's " Political Economy," pp. 635, 636. 



THE STUDY OF POLITICAL ECONOMY, 113 

deres sous le rapport historique, economique, et 
politique en France et a I'etranger" (second 
edition, 1867), 4 vols. This gives a comparison 
of the system of taxation in various countries. 

Alexander Johnstone Wilson's " The Na- 
tional Debts, Taxes, and Rates." (London, 
1882, in "Citizens Series.") This furnishes a 
view of the whole English system of taxation 
in a small compass. 

R. Dudley Baxter's " The Taxation of the 
United Kingdom" (1869) offers explanations of 
the incidence of taxation on the various classes 
in the community. See also the same writer's 
"National Debts" (1871). 

" Report of the Commissioners appointed to 
revise the Laws for the Assessment and Collec- 
tion of Taxes," to the New York Legislature 
(Albany, 1875), by David A. Wells, Edwin 
Dodge, George W. Cuyler. 

Second Report, by the same authors, with 
a code of laws relating to Assessment and 
Taxation (1872). These are two notable re- 
ports. 

" Report of the Commissioners appointed 
to inquire into the Expediency of revising and 



IT4 



THE STUDY OF POLITICAL ECONOMY, 



amending the Laws relating to Taxation and 
Exemption therefrom." Made to the Massa- 
chusetts Lower House (Doc. No. 15), January 
1875. 

William Minot's "Taxation" (1881) discusses 
the wrongs of double taxation. See also " So- 
cial Science Journal," January, 1878, for a bet- 
ter treatment of the same subject by the same 
writer. 



CHAPTER V. 

METHODS OF TEACHING POLITICAL ECONOMY. 

A NATION is sometimes so bitterly taught by 
sad experience in financial errors — as was the 
case with France in John Law's time, and again 
in the issue of paper assignats during the Revo- 
lution — that, on the principle of the " burned 
child," it afterwards finds that it unconscious- 
ly keeps to the right and avoids the wrong 
path. So that to-day France is a country where 
correct conceptions of money are almost uni- 
versal, and whose public monetary experiments 
are, as a rule, most admirably conducted. In 
somewhat the same way does the individual 
gain his proper knowledge of political economy. 
Principles must be seen working in a concrete 
form. The key to efficient teaching of it is to 
connect principles with actual facts ; and this 
process can go on in the beginner's mind only 
through experience. By experience, I mean 



Ii6 THE STUDY OF POLITICAL ECONOMY, 

the personal (subjective) effort of each one to 
realize the working of the principle for him- 
self in the facts of his own knowledge. The 
pupil must be put in the way of assimilating 
for himself the principles of his subject in such 
a manner that he feels their truth because they 
are apparent in explanation of concrete things 
all around him. That this is the aim to be 
always kept in view by the teacher and stu- 
dent has been made clear, it is to be hoped, 
by the previous analysis of the character and 
discipline of political economy in Chapters II 
and III. It is now my purpose to make some 
suggestions as to the practical methods of teach- 
ing by which this can be carried into effect. 

I. The relative advantages of lectures and 
recitations for political economy have never, 
to my knowledge, been openly discussed. An 
experience with both methods of teaching leads 
me to think that the lecture system, pure and 
simple, is so ineffective that it ought to be set 
aside at once as entirely undesirable. The dis- 
ciplinary power to be gained by the study is 
almost wholly lost to the student by this method 
of teaching. Nothing is so useful as a sharp 



THE STUDY OF POLITICAL ECONOMY, ny 

struggle, an effort, a keen discussion, or possi- 
bly a failure of comprehension at the time ; 
for nothing will so awaken one to intellectual 
effort, and finally result in the safe lodgment 
of the principle within one's mind as an ob- 
struction and its removal. This is not gained 
by listening to lectures. No matter how clear 
the exposition of the principles may be, no 
matter how fresh and striking the illustrations, 
it still remains that the student is relieved by 
the instructor from carrying on the mental 
processes which he ought to conduct for him- 
self. In fact, the clearer the exposition by the 
instructor, the less is left to the student — the 
lecturer, in fact, is the chief gainer by the sys- 
tem. Moreover, while listening to a connect- 
ed and logical unfolding of the principles, the 
student is lulled into a false belief that, as he 
understands all that has been so clearly pre- 
sented to him, he knows the subject quite well 
enough ; and the result is to send out a number 
of conceited men who really can not carry on 
a rational economic discussion. They wholly 
miss the discipline which gives exactitude, men- 
tal breadth, keenness, and power to express 



Il8 THE STUDY OF POLITICAL ECONOMY. 

themselves plainly and to the point. Then, not 
being forced to think over a principle in its ap- 
plication to various phases of concrete phenom- 
ena, they know the truth only in connection 
with the illustrations given by the lecturer, 
while they utterly fail to assimilate the princi- 
ples into their own thinking. The subject then 
becomes to them a matter of memory. They 
memorize the general statements without ever 
realizing their practical side, and that which is 
memorized for the day of examination is forgot- 
ten more speedily than it is learned, and the 
sum total of the discipline has been simply a 
stretching of the memory. In fact, with the 
average student, in almost any subject the lect- 
ure system leads to cramming. At the best, it 
affords a constant temptation to put off that 
kind of mental struggle which ought to be car- 
ried on by by the student himself — a period of 
doubts and questions — by which alone a clearer 
conception of the subject ultimately emerges. 
In fact, without it, it is doubtful if the student 
ever gets much, if any, of that mental attrition 
on the subject which is the most valuable part 
of the work. An experience of a year with 



THE STUDY OF POLITICAL ECONOMY. 119 

lecturing in an elementary course to a class of 
two hundred and fifty, including the best and 
the poorest men in the university, practically 
convinced me, when taken with other evidence, 
of the truth of the above position ; for, as con- 
trasted with the work of similar men in other 
years under a different system, their examina- 
tion-books were the most unsatisfactory I had 
ever read. 

The usual alternative to the lecture system 
is the plan of recitations from a text -book. 
Even the simplest form of recitations is, in my 
opinion, better than listening to lectures. At 
the very least, the student is put to it to ex- 
press the sense in his own words, and that, 
too, under the criticism of the teacher. But 
this plan has its evident difficulties. If the 
pupil is called upon for only that which is con- 
tained in the book, he falls into the habit of 
memorizing, and fails to think for himself. If 
you give him the clew, he can tell you on what 
part of the page the statement is found, and he 
can talk in the language of the book; but he 
knows nothing of the power of applying it to 
what he sees. If the learner is very clever and 



I20 THE STUDY OF POLITICAL ECONOMY, 

inquisitive, he may do something for himself, 
but the average pupil quite misses the real good 
of such a course. 

2. As it is evident that neither lectures nor 
formal recitations in the old fashion are satis- 
factory, we are inevitably led to adopt a plan 
which possesses the advantages of both. Some 
text-book is essential as a basis for the instruc- 
tion.* In it the pupil should find an exposition 
of the principles, and a provocation to apply 
them to practical things as he reads. Then he 
should come to the class-room as intelligently 
familiar with the principles as his reading can 
make him. Now comes the work of the in- 
structor. With a class of beginners, it is sur- 

* The question naturally arises in the teacher's mind, What 
is the best text-book ? This, of course, is a matter of individual 
experience and judgment, and competent persons will differ in 
offering advice. From my own point of view, I should strongly 
recommend for mature students, who can give to it fifty or sixty 
hours of recitation, Mill's "Principles of Political Economy." 
For those who wish a less severe course, for a shorter time, Mr. 
and Mrs. Marshall's "Economies of Industry" is an excellent 
book. For the same persons, a forthcoming book by Professor 
Simon Newcomb, to be published this summer (1885), would be 
admirable. I have seen the advanced sheets, and find the system 
of applying principles to facts at the end of each chapter admira- 
bly carried out. For books to be consulted by the teacher, he is 
referred to the " Library " list at the beginning of this volume. 



THE STUDY OF POLITICAL ECONOMY. 121 

prising- how easy it is to show even to the best 
men a gap in their knowledge, or a misunder- 
standing of the principle. Present an illustra- 
tion different from that of the book, and ask 
them to explain the situation, and very few will 
be able to respond. The necessity of seeing 
the essential point in the facts and the attempt 
to describe the operation of the principle will 
effectually rout the man who has merely memo- 
rized the book, and teach him to think out 
the matter more thoroughly for himself in the 
future. The teacher, also, will try to find out 
the accidental obstacles which in a young mind 
obstruct the understanding of the point in ques- 
tion. Let the pupil be asked to state the mat- 
ter, and let the teacher note the imperfections. 
At the same time he can stimulate another stu- 
dent by questioning him as to one of these im- 
perfections. If a correction is not obtained in a 
clear and connected manner from a member of 
the class, let the instructor apply the Socratic 
method. At first ask a question which the 
learner readily understands, and then lead him 
naturally and gradually by logical steps up to 
the point wherein he had failed of understand- 



122 THE STUDY OF POLITICAL ECONOMY, 

ing. He will then see his own difficulty, and 
at the same time he has had a little robust exer- 
cise for his mind. If this is carried on before 
his fellows, it will the better cultivate coolness 
and self-control before an audience. 

3. Above all, the hour should not be wasted 
in simply rehearsing what has been read in the 
book. The student should go away from the 
class-room feeling that he has received some 
new idea, or some interesting fact which illus- 
trates his subject. The work of the class-room 
should be cumulative in its effect as compared 
with the results of text-book reading. The 
teacher should in every way stimulate questions 
from members of his class, and urge the state- 
ment by them, either orally or in writing, of 
their doubts and difficulties. If there is some 
timidity in presenting a weakness in the pres- 
ence of a class, ask a question of some more 
manly person of the number, and the timid stu- 
dent will soon see that others are not much bet- 
ter off than he. In fact, all will have difficulties 
in understanding, or in interpreting principles, 
some trivial, some serious ; and the pupil will 
become discouraged unless these are removed. 



THE STUDY OF POLITICAL ECONOMY. 123 

When each one sees that others are also hin- 
dered by obstacles, there will be a greater 
freedom in asking questions. Moreover, in or- 
der to keep up a steady and regular training, 
which will produce the best disciplinary results, 
let the questions of the instructor every day run 
backward in review, and especially aim to 
bring out the connection of one part of the sub- 
ject with another. It will be very effective if 
done just about the time that the past work is 
growing a little dim before the presence of 
newer ideas. In no subject, perhaps, more than 
in political economy, is it necessary to know 
the preliminary steps in order to understand 
the later work ; so that the pupil must be actu- 
ally in possession of principles previously ex- 
pounded, for which he may be called upon at 
any time. It is simply impossible for a person 
to be absent and neglectful for a time in his 
study, and then come into the class-room to 
make a brilliant show on an intermediate frag- 
ment of the subject. He can be too easily 
exposed as a humbug to attempt it a second 
time. Moreover, thus to force him to do the 
work as he goes along is the greatest favor one 



124 THE STUDY OF POLITICAL ECONOMY. 

can do for the pupil ; and the usual cramming 
before the examination becomes, in reality, a 
general review, which is very useful in bring- 
ing him to see the connection existing through- 
out the whole subject. 

4. If the class is so large that it is impos- 
sible for the instructor to reach each member 
as often as he might wish with the above meth- 
od, there is one device which is more or less 
useful. At the beginning of the hour let him 
write a question upon the blackboard, to be an- 
swered by each one in writing within the first 
ten or fifteen minutes. The attempt to write 
out an explanation clearly, without hint or clew 
from the instructor, will reveal to the best stu- 
dent the deficiencies and gaps in his knowledge. 
Each one will then have the keenest interest to 
know what is considered a satisfactory answer 
to the question. At the next exercise of the 
class, the instructor can read some good and 
some bad answers, point out the general mis- 
takes, and advise his pupils for the future. No 
exercise can be better than this in cultivating 
the habit of careful expression, and in learning 
how to make a clear and pointed exposition of ^ 



THE STUDY OF POLITICAL ECONOMY. 125 

a subject in a short space. This practice tends 
to secure the accuracy which in the oral discus- 
sions is made second to fluency and readiness. 
The teacher, I believe, will be forced to some 
such method as this, if he hopes to get a real 
idea of the prevailing difficulties in the minds 
of his class. They are in the nature of anony- 
mous communications, in which, as no one else 
can know what he is writing, the student may 
without timidity show exactly what he can do. 
In fact, the written answers afford admirable 
means of judging how far the class have taken 
serious hold of the subject, and they enable the 
instructor to modify the nature of his questions 
to members, or to change the character of the 
exercise to suit a set of slower men. But one 
of the best uses of these written answers, in 
my experience, has been to break down the ti- 
midity which prevented questions in the class- 
room. The criticism of an answer before the 
class is certain to bring out as defender, either 
the writer, or one who gave a similar reply ; 
and the whole number of men will be very rest- 
ive under criticism of a piece of work at which 
each has tried his hand. As soon as question- 



126 THE STUDY OF POLITICAL ECONOMY. 

ing becomes natural and easy, the number of 
written exercises can be diminished, and the 
whole hour given to discussions with the class. 
5. Since the chief work of the class-room is 
not to enable students to discover principles, 
but rather to understand and apply them, prob- 
ably the most useful method of interesting a 
class is to present to them, in extracts from the 
newspapers of the day, bits of fallacious dis- 
cussions * which may come under the head of 
the subject in hand, and then to ask for criti- 
cism and discussion. This will also suggest 
doubts and difficulties which had not been anti- 
cipated in the minds of some, and will aid in 
stimulating questions. The appositeness of a 
timely topic before the public is peculiarly ser- 
viceable for such purposes. In fact, the practi- 
cal matters of our own country will never fail 
to excite a lively interest in almost any class; 
and through this interest the teacher can find a 

* Professor W. G. Sumner has published a volume of " Prob- 
lems in Political Economy " (1884), which adopts the plan above 
described for advanced classes. The system is also most excellently 
carried out in a forthcoming elementary treatise on Political 
Economy by Simon Newcomb, to be published during the coming 
summer. 



THE STUDY OF POLITICAL ECONOMY. 127 

way of leading- men to study principles more 
carefully. A National or State campaign is 
very likely to furnish an instructor with a plen- 
tiful supply of extracts from speeches of an 
economic character for discussion by his class. 
The learner in political economy is not hin- 
dered by the same disagreeable obstacles, as 
hamper the medical student, in finding subjects 
on which to put his learning into practice. 

6. Many minds are unable to keep hold on 
an abstraction, or general principle ; or they 
may have been untrained in making nice dis- 
tinctions between ideas or definitions. And 
these students form a very large proportion of 
the ordinary classes. To such persons a skillful 
teacher ought to offer some help. Diagrams 
have seemed to me most useful for this purpose, 
and a reason can be given for their use. Just as 
in beginning a strange language, when words 
of widely different meaning have a similarity 
to the untutored eye, the distinctions do not 
make much impression. So it is in regard to 
principles and definitions in political economy. 
Therefore, visible expression of the abstract 
relationships, by diagrams, or by any figures 



128 THE STUDY OF POLITICAL ECONOMY. 

which represent the abstract in a concrete 
form, will be of very considerable service to 
the average student. This matter seems to me 
to be of such practical importance in teaching 
that it will be worth while to illustrate my 
meaning by a few examples. 

(^.) Since material wealth comprises all 
things that have value ; since capital is only 
that wealth employed in reproduction, and not 
used by the owner himself ; and since money is 

that part of wealth in circu- 
lation aiding in the transfer 
of goods — the relations be- 
tween the three may be ex- 
pressed to the commonest 
apprehension by some such 
device as the following, in 
which the area of circle A represents the total 
amount of wealth ; B, the capital saved out of 
the total wealth ; and C, the money by which 
goods are transferred — only that part of circle 
C being capital which, inside of circle B, is be- 
ing used as a means to production. 

Again, (^) it is seen that different classes 
of laborers, arranged according to their skill, 




THE STUDY OF POLITICAL ECONOMY, 129 

form, as it were, social strata, of which the 
largest and the poorest paid is composed of 
the unskilled laborers at the bottom. This 
may be shown to the eye at once by the sec- 
tion of a triangle, in which A represents the 
largest and least paid class ; B, the better-edu- 
cated, and relatively more skillful laborers ; 
ending finally in the few at the top, of the most 




competent executive managers. Now, if A 
were to become as fully skilled as B, and com- 
petition should become free between all mem- 
bers of A and B ; and if this were to go on in 
the same way to include C — the effects of this 
breaking down of the barriers which hinder 
competition might be illustrated by the fol- 
lowing changes in the above triangle : the areas 
of A, B, and C may be thrown together into 



130 THE STUDY OF POLITICAL ECONOMY, 

one area within the whole of which movement 
and choice are perfectly free to the laborer, and 
wherein wages are in proportion to sacrifice. 
This can be done by striking out the lines of 
division between A, B, and C, and represent- 
ing the change by the area included between 
the base and the dotted lines. 




Examples might be multiplied in illustra- 
tion of my method, but these must suffice. By 
such means there can be planted inside even 
the dull mind an outline of an idea which can 
then be modeled and shaded to the condition 
of a natural truth. The teacher will find, by 
experience, that an idea thus given is very sel- 
dom forgotten. The pupil has thus once 
turned the abstraction into a concrete form, 
and, after he has once grasped it, he can now 



THE STUDY OF POLITICAL ECONOMY, 131 

use it for himself. It does not at all imply that 
he will get hard and definite conceptions of 
human affairs by this process ; for he is 
shown that the principle appears in other 
forms, and he is constantly seeing that it is so. 
Having found out how a principle explains 
one set of facts, he can be led to see its appli- 
cation to other conditions. 

7. In close connection with this method, 
but having an entirely different end in view, 
is the use of charts and graphic representa- 
tions of statistics. The method just described 
above aimed to help in finding concrete ex- 
pressions for the general principles ; but 
graphic methods usually serve best to assist in 
that part of the economic process heretofore 
referred to as verification. There is an abun- 
dance of economic facts in regard to which the 
connection between cause and effect is either 
unknown or grossly misunderstood. In truth, 
the subjects to which political economy applies 
are constantly changing, nay, are even multi- 
plying. These data, after having been collect- 
ed with great care (which is the duty of the 
statistician), are the materials for the process 



132 THE STUDY OF POLITICAL ECONOMY, 

of verification. By this " systematized method 
of observation," says Cairnes,* ** we can most 
effectually check and verify the accuracy of 
our reasoning from the fundamental assump- 
tions of the science ; while the same expedient 
offers, also, by much the most efficacious means 
of bringing into view the action of those minor 
or disturbing agencies which modify, sometimes 
so extensively, the actual course of events. The 
mode in which these latter influences affect the 
phenomena of wealth is, in general, unobvious, 
and often intricate, so that their existence does 
not readily discover itself to a reasoner engaged 
in the development of the more capital eco- 
nomic doctrines." In this part of the process 
graphic representations of statistics are invalu- 
able. 

Every one knows the common dislike of 
dreary statistics ; to many persons columns of 
statistics are repellent or meaningless. Collec- 
tions of facts regarding banking, finance, tax- 
ation, and wages become a tangle in which 
one's direction is constantly lost. But arranged 
graphically the whole direction of a movement 

* " Logical Method," p. 97. 



THE STUDY OF POLITICAL ECONOMY. 133 

is seen at once, and the mind takes in new and 
unexpected changes, which force an investiga- 
tion into their cause. Moreover, there comes 
a certain breadth of treatment, when, in look- 
ing at the facts graphically expressed, one is 
able to see the whole field at once. There is 
no waste of thought on temporary and accident- 
al movements, for the action is seen from be- 
ginning to end at one glance. There are many 
charts which would illustrate this meaning 
very distinctly ; but perhaps none are simpler 
than the one here appended, showing the steady 
and continuous fall in the value of silver rela- 
tively to gold since the discovery of the New 
World. No one has ever claimed that there 
has been any "unfriendliness" displayed to- 
ward silver in the legislation of the chief coun- 
tries of the world before the present century, 
at the farthest, and yet the white metal has 
been steadily on the decline ever since the 
Spanish galleons, in the fifteenth century, be- 
gan to pour the precious metals of America 
into the coffers of Spain. 

Another illustration of my meaning can be 
found in the study of the facts relating to 



THE STUDY OF POLITICAL ECONOMY, 13^ 

American shipping-. We have heard — until 
the story is now worn threadbare — of the de- 
cline of our tonnage engaged in the foreign 
carrying trade ; we have Hstened to explana- 
tions which attribute this decline wholly to 
our Civil War, or to the introduction of steam 
and iron (or steel) ships. But by collating the 
statistics for sailing-vessels alone, if we sepa- 
rate the question entirely from steam and iron, 
and compare our situation in regard to sailing- 
vessels with that before the use of steam — 
the period of our great shipping prosperity — 
the comparison gives some curious results. 
These are shown to the eye at a glance ; and 
it would have been difficult to find them had 
not this graphic system been applied. The 
striking facts imperatively call for explanation. 
We see at once that, practically, to the end of 
the war our sailing tonnage changed only with 
the total; and that after 1869 it was the for- 
eign tonnage which then rose and kept a close 
attendance on the total, while the American 
figures showed scarcely any relative change. 
The two lines, representing foreign and Ameri- 
can vessels, after a short struggle with each 



136 



THE STUDY OF POLITICAL ECONOMY, 



Chart showing the Tonnage of Sailing Vessels entered at 
Seaports of the United States each year, from 1844 to 
i88j, inclusive. 





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THE STUDY OF POLITICAL ECONOMY. 137 

other exactly changed their relative positions 
to the line representing the total tonnage. The 
graphic method lays bare the naked facts for 
the scalpel of the investigator. The student is 
then in a position to apply principles and dis- 
cover explanations. No table of figures, I am 
convinced, would disclose vital relations in the 
statistics in the searching way by which it is 
done with the aid of a few lines on a chart. 

In short, the more extended collection of 
economic data is now rendered possible through 
the better methods employed in census and 
statistical bureaus, and the resort to the work 
of verification of economic principles in the 
examination of these data is one of the best 
means by which political economy can be re- 
deemed from the baseless and common charge 
of being made up of formulae which have no 
practical use. Into this work one can carry no 
instrument so effective and helpful as graphic 
representations. In fact, the investigator, after 
having collected his tables and columns of fig- 
ures, will find his gain in first putting them 
in some graphic form, before he can intelli- 
gently see exactly with what he has to grapple ; 



138 THE STUDY OF POLITICAL ECONOMY, 

then he can turn his energies directly upon the 
problems which are disclosed by the chart to 
every other eye as well as his own. 

There are, however, other important gains 
to be derived from the use of charts by the 
teacher. Above all, they are interesting. They 
will attract the idler by something new which 
he can easily understand, although he can not 
explain the causes ; they stimulate the quick by 
putting them at once in possession of the facts 
to be explained. When lecturing upon practi- 
cal questions, one great difficulty presents itself 
to the teacher in trying to find the means of 
laying before his class the actual condition of 
the subject which is to be investigated. If it 
were proposed to place the statistics on the 
blackboard before him, the time of the lect- 
urer would all be lost while the student was 
copying figures. The references to the books 
can be given where these figures dealt with 
by the lecturer are collected, but by a chart 
long columns of statistics are easily imported 
into the class-room, become the basis of discus- 
sion, and are photographed on the listener's 
mind once for all in an attractive and interest- 



THE STUDY OF POLITICAL ECONOMY. 139 

ing way. The slow and painful work of months 
is in this way presented to a class in a few min- 
utes, and the practical lessons caught at a 
glance. For this purpose, charts are the labor- 
saving machines of statistics. 

A word or two as to the details of preparing 
charts may not be impertinent. They can be 
made on common glazed white cotton cloth 
(called sarcenet cambric), which receives ink 
or water-colors ; but the labor of ruling the 
cloth in squares before the construction of the 
chart is very considerable. Use can be made, 
however, of heavy manila paper, made large 
enough by sticking two large sheets together. 
Some printers can now rule this paper in 
squares to suit the convenience of the w^orker ; 
but these guiding-lines ought to be faint, and 
not so heavy as to overpower the lines of the 
chart. The instructor can also have a black- 
board ruled with faint white lines, after the 
manner of co-ordinate paper, in his room, on 
which he can in half an hour put a simple chart, 
ready for the coming lecture. Different colored 
crayons serve the purpose admirably. Students 
can then use co-ordinate paper, in their notes, 



140 THE STUDY OF POLITICAL ECONOMY. 

and draw ofiF an accurate copy of the chart in a 
few moments, before or after the lecture. This 
is a necessary course, unless some more feasible 
method than now exists should be found by the 
instructor for multiplying copies from his single 
chart in such numbers as to supply all members 
of his class. 

So far I have been speaking of charts for 
the class-room. Perhaps, in their own good 
time, such economic charts can be bought of 
educational agencies. But ordinary co-ordinate 
paper, on a small scale, is the best form in 
which first to construct the chart. It can be 
purchased in sheets at a small price, and is 
invaluable for both student and instructor. In 
fact, no lesson is more stimulating to a class 
than to give them the data of a subject and ask 
them to put it into graphic form with the use 
of such paper. For the first time they begin 
to realize that statistics are not dry ; indeed, 
any one who has turned over the pages of 
Walker's " Statistical Atlas " will find out for 
himself how the columns of census tables* can 

* Another successful attempt, on an elaborate scale, has been 
made with the materials of the census of 1880 by Messrs. Gannett 



THE STUDY OF POLITICAL ECONOMY. 141 

talk to him in forms and colors not only with- 
out weariness, but with a sense of surprise at 
the interest they excite. 

8. When the instructor comes to examina- 
tions he will find some difficulties in combining 
an ideal plan with actual conditions. In mak- 
ing out a paper he ought, of course, to keep 
in view that the questions should be selected 
so as to test not the memory, but the power of 
the pupil to apply principles. For this reason 
the ideal paper should contain nothing which 
the student has seen in that form before. The 
facts he is called upon to explain ought to be 
fresh ones, and the fallacies he is to examine 
should be such as he had not previously con- 
sidered. This, however, is not wholly neces- 
sary. The explanation of parts of the subject 
is certain to be difficult enough to warrant 
questions upon them even if they have been 
referred to in the class-room many times be- 
fore. For practical purposes, however, it seems 
best to remember that a class is composed of 
all kinds of persons, and, while the majority of 

and Hewes in Scribner's " Statistical Atlas of the United States " 
(1885). 



142 THE STUDY OF POLITICAL ECONOMY. 

the questions should be of the character which 
I have described, yet at least a few easier and 
more encouraging questions should be set. In 
the examination-room the student, moreover, 
should be instructed to study each question 
with care, and avoid haste in answering, before 
he is sure that he has really caught the pivotal 
point of the question. Fairly good students 
often write about the question but do not an- 
swer it. It should be definitely understood that . 
no credit is to be given for irrelevant answers. 
Then, also, the examination can be used as a 
teaching process ; since, by inserting an impor- 
tant subject, the attention given to it at these 
times will be such as to keep it from speedy 
oblivion. Moreover, it will be well, as soon 
after the examination as possible, to read a good 
and a poor answer to each question before the 
class. They will know better what is expected 
of them in the future — hke troops after their 
first fight. After such an examination the in- 
structor will find his class much more discip- 
lined and more ready to exert themselves in 
the intellectual wrestling. The vigorous prep- 
aration for the examination has really given 



THE STUDY OF POLITICAL ECONOMY. 143 

them a better grasp of the subject, and the 
teacher can easily bring on a warm discussion 
now, because they really know something and 
feel that they know it. In all this it is under- 
stood, of course, that I have had in mind writ- 
ten examinations. 

9. When first approaching the study, it has 
been found to be of service to some minds to 
suggest that on the first reading of the text- 
book they note in the margins in a few penciled 
words the gist of each paragraph as it is read ; 
then, at the close of the chapter, that the reader 
review it by means of his marginal notes, and, 
finally, make a general but brief synopsis of the 
chapter. This will both save time and teach 
that essential thing — how to study rapidly but 
thoroughly. It will destroy aimless reading, 
which is so common in these days of many 
books. 

ID. Inasmuch as a vigorous contact of mind 
with mind on a subject which students are ap- 
proaching for the first time is necessary to pro- 
duce something more than a cartilaginous or 
veal-like quality in their knowledge, it is desira- 
ble to stimulate discussion among members of 



144 THE STUDY OF POLITICAL ECONOMY, 

the class outside of the class-room. To accom- 
plish this purpose, I know of no better plan 
than to recommend students to form temporary- 
clubs of three or four persons to meet two or 
three times a week for an hour's discussion of 
the questions and topics which have been sug- 
gested by the text-book, by newspapers, or by 
facts of every-day observation. Such discus- 
sions, if the evil of irrelevancy can be frowned 
upon, will toughen the intellectual fiber, and 
give the means also of getting more from the 
instructor through questions upon difficulties 
and disagreements which have arisen in the 
clubs.* Congenial persons might group them- 
selves together in this way with profit to their 
economic progress, and gain something also in 
social pleasure of a healthy kind. 

II. In advanced courses, much of what has 
been said in regard to details in the conduct of 

* When about twenty, John Stuart Mill met twice a week in 
Threadneedle Street, from 8.30 to 10 A. M., with a political econ- 
omy club, composed of Grote, Roebuck, Ellis, Graham, and Pres- 
cott, in which they discussed James Mill's and Ricardo's books. 
It was understood that a topic should not be passed by until each 
member had had full chance for a discussion of his difficulties and 
objections. In these meetings Mill elaborated whatever he has 
added to the knowledge of political economy. 



THE STUDY OF POLITICAL ECONOMY. 



145 



the class will be less important, because the 
teaching is necessarily different in kind. Such 
courses naturally fall either (i) into those which 
continue to study principles, as in the systems 
of various writers or schools of political econ- 
omy in the past and present, or (2) into those 
which treat historical or practical questions. 
In the former, the lecture system is unsatisfac- 
tory for reasons already given ; for the mem- 
bers of the class should themselves be constant- 
ly wrestling with the fuller discussion of sub- 
jects in which they can hitherto have had only 
a general knowledge. Experience seems to 
show that a topic, furnished with references to 
writers, affords the best method of procedure. 
This, of course, implies a good working library 
and a list of reserved books. 

In the practical courses a large part of the 
training consists in teaching the student how to 
use books, how to familiarize himself with the 
principal storehouses of statistics, such as the 
English " Parliamentary Documents," or our 
own Government publications ; how to collect 
his materials in a useful form ; how to apply 
graphic representations wherever possible ; in 
7 



146 THE STUDY OF POLITICAL ECONOMY, 

brief, to learn how to carry on an investigation 
in the economic field. Of course, the familiar- 
ity with the facts of several of the leading ques- 
tions of the day will form no small part of the 
advantage of such work. But the greatest 
good comes, of course, from putting the student 
on his own resources at once and forcing him 
to find his own materials, look up his own 
books and authorities, and come to a conclusion 
on the subject assigned to him independently of 
all aid or suggestion. The instructor can then 
at the conferences take up a paper for criticism 
and discussion, or first assign it to another mem- 
ber for that purpose. This is a feasible plan; 
but, if carried on throughout a whole course, it 
requires of the student in a regular college 
course so much time that his other work must 
suffer, and, in addition, but few subjects can be 
taken up in this thorough and leisurely way. 
This plan can be properly carried out only 
when there are a few persons able to devote 
their whole time to some economic investiga- 
tions. In practice it has been found best to use 
the lecture system partially. One subject can 
be taken up by the instructor at regular exer- 



THE STUDY OF POLITICAL ECONOMY, j^y 

cises, for which he furnishes beforehand the ref- 
erences, and partly lectures and partly discuss- 
es the subject with his class, thus guiding them 
steadily over the field and directing the disposi- 
tion of the time to be devoted to each subject. 
In this way many more subjects can be reached 
during the year. But the advantages of the in- 
vestigating method can be partly retained by 
requiring a monograph from each member of 
the class on a practical subject of his own selec- 
tion from a list prepared by the instructor, and 
this thesis can count for attendance on part of 
the lecture-work. In this thesis the student is 
pushed to do his best to give a really serious 
study to some particular topic, and he is ex- 
pected to do it independently of any aid be- 
yond general oversight and direction ; and he 
is warned that the paper will be of greater 
value, provided it contains the bibliography of 
the subject and constant reference by page and 
volume to his authorities. 

12. The preparation of bibliographies is part 
of a teacher's duty. Moreover, he who has ac- 
cess to a rich and well-appointed library can do 
a service to the rest of his guild by leaving be- 



148 THE STUDY OF POLITICAL ECONOMY, 

hind him notes of his bookish experiences. He 
can in a few words say whether a book is good 
or bad for a particular use, or indicate what 
part of it contains a valuable discussion or use- 
ful facts in a subject within his study. For 
this purpose it has been a great convenience to 
have little blank-books of ordinary stiff manila 
paper, six inches by three, with each sheet per- 
forated like postage-stamps near the butt of the 
book, so that it can be torn off smoothly. On 
each page a book can be entered under a suit- 
able heading, with its exact title and author, 
and room still be left for a very generous 
amount of criticism or commendation, or for 
noting the contents of the book. The cards can 
be laid away alphabetically by subjects in a 
drawer, and will prove of invaluable aid at 
many times. Books of which one has heard 
but never seen, can also be entered with a star, 
to be erased when a book has been examined. 
This systematic habit is peculiarly desirable 
when one is hunting for the facts of a certain 
subject. By this means one will be saved the 
loss of time caused by failure to remember 
where a statement has once been seen. 



THE STUDY OF POLITICAL ECONOMY. 149 

13. In the foregoing remarks on methods 
of teaching political economy, I have kept in 
mind persons of the age and maturity possessed 
by usual college students. As a rule, these are 
the only persons who are given instruction in 
this subject. Still, knowing as we do the need 
of simple elementary instruction in political 
economy in the secondary and high schools, 
so that younger pupils of less maturity than 
the college student ought to have good effec- 
tive teaching, something ought to be said as 
to the methods which may be serviceable for 
such classes. 

A difficulty with which we are met at the 
outset is the lack of training among high-school 
teachers for original and suggestive object- 
teaching in economics. Any scheme, based on 
such a system, implies the possession of a very 
considerable economic training by the teachers. 
What is meant may be seen by the following 
excellent suggestions for certain parts of the 
study made by Dr. Ely : "^ 

" The writer has indeed found it possible to 

* In " Methods of Teaching and Studying History," edited 
by G. Stanley Hall, p. 63. 



150 THE STUDY OF POLITICAL ECONOMY, 

entertain a school-room full of boys, varying in 
age from five to sixteen, with a discourse on 
two definitions of capital — one taken from a 
celebrated writer, and the other from an ob- 
scure pamphlet on socialism by a radical re- 
former. As the school was in the country, 
illustrations were taken from farm-life, such as 
corn-planting and harvesting, and from the out- 
door sports of the boys, such as trapping for 
rabbits." 

In teaching the functions of money, the fol- 
lowing approach to the subject, suggested by 
the same writer as a means of awakening an 
interest, is a good one : " Take into the class- 
room the different kinds of money in use in the 
United States, both paper and coin, and ask 
questions about them, and talk about them. 
Show the class a greenback and a national bank- 
note, and ask them to tell you the difference. 
After they have all failed, as they probably 
will, ask some one to read what is engraved on 
the notes, after which the difference may be 
further elucidated." 

If the teacher is sufficiently master of the 
subject to proceed by such ways to acquire a 



THE STUDY OF POLITICAL ECONOMY, 15 j 

hold on the young pupil he will probably not — 
as things now go — be found in a high school. 
It is to be hoped that he may in the future ; 
but, until that is the fact, some more practicable 
method of teaching must be adopted. Much 
must, therefore, depend on the text-book. But 
no fully satisfactory one is available for such 
purposes. Of existing books the following may 
be suggested : W. S. Jevons's "■ Primer of Politi- 
cal Economy" (1878). This little treatise is 
marred by the treatment of utility and value ; 
but yet it is a really good sketch of the subject 
in 134 pages. The teacher can further illus- 
trate the principles to his class by familiar facts, 
as already explained. The instructor should set 
forth distinctly in his mind, as a general object 
to be kept before him, the attempt to leave in 
the understanding of his pupils some simple 
principle in each case. If he is talking of capi- 
tal, the several illustrations should all lead the 
pupil back to the essential truth which is finally 
to be stated in general terms. Then, the pupil, 
when reviewing, should be required to reverse 
the process, and then called on for principles 
and asked to illustrate them. The aim of the 



1^2 THE STUDY OF POLITICAL ECONOMY. 

teacher should be, after awakening interest, not 
simply to teach some few facts to which eco- 
nomic principles apply, but to try to drive 
home a few fundamental truths, and exercise the 
pupil, as far as time and skill allow, in tracing 
their operation in facts. For economic facts 
are constantly shifting, while principles do not. 
A boy taught how properly to view one set 
of facts about paper money will go all right as 
long as the conditions remain exactly the same, 
but when they change he is very badly off for 
guidance. In elementary teaching, therefore, 
the teacher should aim at giving a clear com- 
prehension of simple principles, and at offering 
materials for practice in applying these princi- 
ples. Much, consequently, which has been said 
in regard to more mature students will be 
equally applicable to the teaching of young 
boys. 

In this brief and inadequate way I have at- 
tempted to suggest from my own experience 
what may enable others to avoid difficulties, and 
possibly to aid in a more rational method of 
teaching political economy. It is scarcely more 



THE STUDY OF POLITICAL ECONOMY. 



153 



probable that what I have said is all new than 
that others should agree with me throughout in 
what I have advanced ; nor is it unlikely that 
other teachers may have many other suggestions 
to make in addition to mine. If my efforts may 
call them out and aid in better methods of 
teaching, I shall be amply repaid. 



THE END. 



k NEW AND CAREFULLY REVISED EDITION OF 
JOHN STUART MILL'S 

Principles of Political Economy. 

By JAMES LAURENCE LAUGHLIN, Ph.D., 

Assistant Professor of Political Economy in Harvard University. 



No writer on Political Economy, since Adam Smith, the acknowledged 
father of political science, can be compared in originality, exact and for- 
cible expression, and apt illustration, to John Stuart Mill. His writings 
on this great subject, while practical and popular in their adaptation, are 
also characterized by the true philosophic method. In his knowledge of 
facts and conditions, his clearness of understanding, and the soundness 
of his reasoning, he excels all other writers on the subject, and his " Prin- 
ciples OF Political Economy " has been an unfailing source of informa- 
tion and authority to all subsequent writers and students of political 
science. 

To present this work in form, size, and method, somewhat better 
adapted to class-room use, and present modes of study, and at the same 
time to preserve it so far as possible in the form and language of its 
great author, has been the aim in the present revision. The editor has 
made this work essentially a revision, and not a systematic mntilation. 
The publishers therefore feel confident that the new edition will be found 
thoroughly adapted to class use, and as such will prove a valuable and 
satisfactory text-book, and at the same time will be found to retain and 
present all the essential and valuable features of the original work. 

The new edition retains, in its own clear exposition, the connected 
system of the original, and at the same time its size is lessened by omit- 
ting what is Sociology rather than Political Economy. The difficulties of 
the more abstract portions of the original work are much lightened, and 
the new edition presents, in connection with the general tenor of the 
work, some important additions of later writers. 



The publishers respectfully invite Teachers of Political Econ- 
omy to examine the new edition of Mill's Principles of Political 
Economy before selecting a manual for their classes. 



Betail price, $3.50. I^iberal terms for introduction. 



Address D. APPLETON d CO., Publishers, 

NEW YORK. BOSTON, CHICAGO, SAN FRANCISCO. 



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